Investor Education

Understanding Trust Deed Investing

A comprehensive guide to how trust deed investments work — the mechanics, protections, returns, and risks every investor should understand before committing capital.

What Is a Trust Deed?

The Foundation of Secured Real Estate Lending

A trust deed (also called a deed of trust) is a legal instrument used in real estate transactions where a borrower conveys title to a neutral third-party trustee as security for a loan from a lender. Unlike a traditional mortgage, a trust deed involves three parties: the borrower (trustor), the lender (beneficiary), and the trustee. If the borrower defaults, the trustee has the authority to sell the property through a non-judicial foreclosure process — providing lenders with a faster, more efficient path to recovery than a standard mortgage.

Lien Position

Why First Lien Matters

Lien position determines the order in which creditors are repaid in the event of a foreclosure or property sale. A first lien holder has the highest priority claim on the property — they are paid in full before any second lien, junior creditor, or equity holder receives anything. CloudMoney focuses exclusively on first lien trust deed positions, meaning investor capital is secured by the most senior claim on the underlying real property. This structural protection is a cornerstone of our capital preservation strategy.

Loan-to-Value Ratio

Understanding LTV and Equity Cushion

The Loan-to-Value (LTV) ratio expresses the loan amount as a percentage of the property's appraised value. A 60% LTV means the loan is $600,000 on a $1,000,000 property — leaving a 40% equity cushion. This buffer protects investors: even if the property declines in value, there is substantial equity before the loan becomes under-secured. CloudMoney underwrites to a maximum 65% LTV on all originations, and most positions are funded at 60% LTV or below, based on independent third-party appraisals.

How Returns Are Generated

Interest Income from Real Property

Trust deed investors earn returns through interest payments made by the borrower on the underlying loan. These payments are typically distributed monthly, providing investors with a predictable income stream. The interest rate is fixed at origination and documented in the promissory note. Because the loan is secured by real property — not equity, stock, or unsecured debt — the income stream is backed by a tangible, titled asset. CloudMoney's current portfolio targets annual returns in the 10–11% range, paid as monthly distributions.

Accredited Investor Requirement

Who Can Participate

Trust deed investments offered through CloudMoney are available exclusively to accredited investors as defined under Rule 501 of Regulation D of the Securities Act of 1933. An accredited investor is generally an individual with a net worth exceeding $1,000,000 (excluding primary residence), or annual income exceeding $200,000 ($300,000 jointly with a spouse) in each of the two most recent years with a reasonable expectation of the same in the current year. Entities such as trusts, LLCs, and corporations may also qualify. CloudMoney verifies accreditation status prior to any investment.

Risk Considerations

Understanding the Risks

While trust deed investing offers meaningful structural protections, it is not without risk. Property values can decline, borrowers can default, and foreclosure proceedings — even non-judicial ones — take time and incur costs. Liquidity is limited: trust deed positions are not publicly traded and cannot be easily sold before maturity. Market conditions in the Intermountain West and broader real estate cycles can affect collateral values. CloudMoney mitigates these risks through conservative underwriting, first lien positions, independent appraisals, and title insurance — but investors should carefully review all offering documents and consult their own legal and financial advisors before investing.

Active Markets

Intermountain West Focus

CloudMoney originates trust deed positions across Utah, Nevada, and Arizona — markets we know deeply, with strong real estate fundamentals and consistent demand.

Currently Active

Active Investment Stage

St. George, UT

Currently Active

Active Investment Stage

Las Vegas, NV

For illustrative purposes only. Indicators represent active lending regions — not specific properties, addresses, or current investment offerings.

Glossary

Key Terms to Know

Familiarize yourself with the terminology used in trust deed investing before speaking with our team.

Trust Deed

A security instrument conveying title to a trustee as collateral for a real estate loan.

Beneficiary

The lender — the party whose loan is secured by the trust deed.

Trustor

The borrower who conveys title to the trustee as security.

Trustee

A neutral third party holding title and empowered to foreclose if the borrower defaults.

LTV (Loan-to-Value)

The loan amount divided by the appraised property value, expressed as a percentage.

First Lien

The highest-priority security interest on a property, paid first in any foreclosure or sale.

Non-Judicial Foreclosure

A foreclosure process conducted outside of court, typically faster and less costly than judicial foreclosure.

Promissory Note

The written promise to repay the loan, specifying interest rate, term, and payment schedule.

Title Insurance

Insurance protecting against defects in the property's title that could affect the lender's security interest.

Accredited Investor

An investor meeting SEC income or net worth thresholds, eligible to participate in private securities offerings.

Get Started

Ready to Learn More?

Speak directly with our investor relations team to discuss how trust deed investing may fit your portfolio objectives.

Contact Our Team How It Works

Educational Disclosure: The information on this page is provided for educational purposes only and does not constitute investment, legal, or tax advice. All investments in trust deeds involve risk, including the possible loss of principal. Trust deed investments offered through CloudMoney Business Trust are available to accredited investors only as defined under Regulation D of the Securities Act of 1933. Past performance is not indicative of future results. Consult your own legal, financial, and tax advisors before making any investment decision.