First things first- inspect the property before funding a trust deed investment. Without seeing it you cannot identify in a certainty things that will matter in the long (or short) run, good or bad. Being able to visualize the area surrounding the property and the property itself will help you to have a vision and sense of calm should the borrower default. It will help you make better decisions as circumstances roll. Of course, you can see the property after default, but it is not the same as seeing it prior to this.
There are two main questions to keep in the forefront of your mind as you inspect a potential property for trust deed investment. 1) What is the property worth? and 2) would it be easy to sell the property if you needed to get rid of it quickly should the loan go into default? Getting behind the eyes of a homeowner- look for things as you inspect the property as though you were going to be living there or working there- as you inspect will help you make good decisions. Is the property and surrounding area appealing? Does the home show well? What flaws exist that can be fixed easily- think pain, carpet, hardware, etc… Are there serious structural, wiring, or other concerning issues that will affect the safety, health and wellbeing of the borrower? Hillside properties should be carefully considered, inspected for any indication of structural problems or damage, and ensure that it is not going to be expensive to fix.
When it comes to the marketability of the property, watch out for neighborhoods with large numbers of foreclosure homes. Homes in these areas will make it difficult to sell a home in this type of area. Unless dropping the price to that what is called a “fire sale” sounds appealing, but then you would not be a very wise investor. Pride of ownership should be sought after- expensive homes can be kept up with good care and this shows buyers it is a good neighborhood where people want to live.