"Before you invest in trust deeds, consider whether the potential risks and rewards are consistent
  with your investment objectives."

 
Is trust deed investing right for me?
Trust deed investing is not for everyone. Minimum investment requirements will vary depending on the trust deed, but as a rule the entry requirements are higher than for most other investments. Ask yourself this question: Am I comfortable committing substantial assets to an investment for at least a period of one year? If you answer yes, then trust deeds may be suitable for you. We can review our investor accreditation standards with you and discuss whether trust deeds are consistent with your investment objectives.

What is the return potential for trust deeds?*
Historically, our net returns for our investors have ranged from 9% to 11% per year. By comparison, stocks have returned about 8% over the last three years (2005-2007), and 10.4% over the last 10. Bonds meanwhile have averaged 4.56% and 5.97% over the same periods. Returns also vary depending on whether you invest in a specific loan or in a mortgage fund, where diversification affords less volatility and reinvestment risk.

What are the potential risks of trust deed investing?
No investment is entirely risk free and in the case of trust deeds, real estate values may fluctuate and borrowers on occasion may default for a number of reasons, which may potentially impair the timing of an investor’s cash flows. But good underwriters like Rama Capital Partners and Athas Capital Group can effectively manage those risks with their strong knowledge of the market, rigorous underwriting policies and sound business judgement.

Risk also varies among different types of trust deeds. Rama Capital Partners makes loans secured by first trust deeds only. A lender holding a first deed of trust is paid off first if the borrower should default and the property must be sold to satisfy the loan. Lenders in second position are paid next, and therefore face potentially more risk.

How does Rama Capital Partners manage risks?
Risk can be mitigated. A trust deed investment is only as secure as the underlying loan, which is a function of the strength of the underwriter. As the credit evaluator of each of its loans, Rama Capital Partners represents the investor to ensure all foreseeable potential risks of the investment are mitigated.

Our strict underwriting standards and awareness of the market are your insurance against potential risk.

Additionally the following factors are the fundamental drivers in the Rama due-diligence process.

  • 65% maximum loan-to value ratio, depending on the property, which is more conservative than the industry averages.
  • Licensed third-party, independant appraisers who are experts in their geographic area and property type.
  • A stringent due-dilligence review process, including a seasoned investment committee that reviews all loans.

Since our inception, our investors have not incurred any losses on any investment that we have underwritten, making Rama Capital Partners the premier partner in trust deed investing.

 

*All financial data - Bloomberg.


Rama Capital Partners CFL# 603 H047
Rama Fund CFL# 603 H064
Rama Capital Advisors DRE# 018221572
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