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As the private lending market continues to evolve, real estate investors seeking consistent income are often faced with a key decision: invest in individual trust deeds or place capital into a professionally managed mortgage fund. While both offer compelling yield potential, a mortgage fund may provide more diversified exposure, streamlined operations, and better risk-adjusted returns. Below, we outline the core advantages of mortgage fund investing relative to individual trust deeds.
One of the most compelling advantages of mortgage funds is diversification. Rather than being exposed to a single borrower, property, or market—as is the case with a trust deed investment—a mortgage fund allocates investor capital across a broad portfolio of loans.
This diversification helps mitigate risk associated with:
At TaliMar Financial, for example, the TaliMar Income Fund targets a loan-to-value (LTV) of 65% across a wide range of fix and flip, new construction, and bridge loans throughout California’s core urban markets. This strategic diversification helps preserve capital and smooth income over time.
Investing in individual trust deeds often requires active participation. Investors must:
In contrast, mortgage funds are fully managed by experienced professionals who handle all underwriting, loan servicing, borrower communications, and fund administration. Investors can benefit from institutional-level diligence and compliance processes without needing to underwrite deals themselves.
This passive structure makes mortgage funds especially attractive for:
Trust deed investors may experience extended capital lock-up periods, especially if a borrower defaults or a project stalls. Even if loans pay off early, reinvesting proceeds can be cumbersome and may lead to idle capital.
Mortgage funds, however, typically offer:
TaliMar Income Fund, for instance, recently waived its lock-up period, offering investors increased liquidity and flexibility to redeem capital when needed—an uncommon benefit in the private credit space.
Unlike trust deed investments, which may only pay interest quarterly or at maturity, mortgage funds generally distribute income monthly. This provides a stable cash flow stream ideal for those seeking predictable returns.
Furthermore, since mortgage funds pool risk across many loans, the likelihood of payment disruptions is significantly lower than in an individual trust deed scenario, where a single missed payment can impact cash flow.
Mortgage funds often provide streamlined tax reporting in the form of a single K-1, compared to the multiple 1099-INT or K-1s required for individual trust deed investors. Additionally:
This structure reduces administrative burdens and improves after-tax yield potential.
While individual trust deeds may appeal to those seeking direct control and willing to invest time in underwriting and management, mortgage funds offer a more passive, diversified, and professionally managed approach to private real estate lending.
For accredited investors seeking income, capital preservation, and lower operational friction, a mortgage fund may be the more prudent long-term strategy.
Learn More
To find out how TaliMar Income Fund may align with your investment goals, contact us at www.talimarfinancial.com or reach out directly to our investor relations team.
TaliMar Income Fund I offers investors the ability to participate in the rapidly growing demand for private real estate debt. The fund is comprised of a diversified portfolio of short-term loans secured primarily on residential single family and multi-family properties throughout California. The fund manager, TaliMar Financial, was established in 2008 and has successfully funded over $500 million in loans. Investors in the mortgage fund include high net worth investors, family offices, and private equity funds who are seeking consistent monthly income, the security of real estate, and the tax benefits of a mortgage fund structured as a real estate investor trust.
Disclosure: This advertisement is for informational purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can only be made by the Private Placement Memorandum (“PPM”) and related subscription documents. Any investment in TaliMar Income Fund I involves significant risk. You should not enter into any transactions unless you fully understand all such risks and have independently determined that such transactions are appropriate for you. Business Purpose Loans arranged through TaliMar Income Fund I, LLC (DFPI CFL License No. 60DBO-137778).
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