It’s important to separate bank lending from private lending or trust deed investing. To compare the two is really like comparing apples and oranges. Banks have a responsibility to the community, are heavily controlled by government regulation and source their lending funds through depositors who may or may not receive any type of return on their deposited funds. In contrast, private trust deed investments are typically loans that were sourced at or after closing for the purpose of investment.

 

When banks aren’t lending it decreases the supply of credit in our economy. As a result, there is a large amount of demand that isn’t being met. This leaves the door open for private investors to fill the void in the marketplace and make investment grade loans that present opportunities to make above average returns without taking on any unnecessary risk.