You have a chance to fund a private loan secured by Las Vegas real estate, the yield looks strong, and the closing is a few days out. Before you wire a single dollar, the real question is simple: how do you know this deal is actually as safe as it sounds? Smart trust deed investing is far less about the advertised rate and far more about the homework you do first.
Quick answer: Vet a trust deed investment by verifying four things before funding — the borrower’s ability to repay, the property’s real value and condition, your exact lien position, and the paperwork that secures your money.
Why due diligence matters more than the rate
A trust deed investment means you (or a pool you invest through) lend money to a borrower, and that loan is secured by a deed of trust recorded against a specific property. If the borrower stops paying, your protection is the property itself and your legal position against it. A double-digit return means nothing if the loan is over-leveraged, the value is inflated, or your lien sits behind three other loans.
In Nevada, most of these loans are arranged by licensed mortgage brokers and companies regulated under the Mortgage Lending Division. Working through a licensed arranger matters, but it does not replace your own review. The four checks below are the ones I walk investors through before they commit.
1. The borrower: can they actually repay?
Start with the person or entity on the other side of the loan. You are not looking for a perfect credit profile — private capital exists precisely because these borrowers often do not fit a bank’s box — but you are looking for a credible repayment story.
- Exit plan: How does the loan get paid off — a sale, a refinance, completed renovations? Is that timeline realistic for the current Las Vegas market?
- Experience: For a fix-and-flip, has this borrower completed projects before, or is this their first?
- Skin in the game: How much of their own cash is in the deal? A borrower with real equity at stake behaves differently than one with nothing to lose.
- Track record: Any prior defaults, judgments, or bankruptcies worth a closer look?
2. The property: is the value and condition real?
Your collateral is the property, so its value has to be independently supported — not just asserted by the person who wants your money. Ask for a current appraisal or a broker price opinion from someone who knows the local submarket, whether that’s Summerlin, Henderson, the southwest, or the northeast valley. Values are not uniform across the Las Vegas metro, and a number that makes sense in one ZIP can be optimistic in another.
Look hard at the loan-to-value ratio. A conservative LTV — the loan amount as a share of the property’s value — is the single biggest cushion protecting your principal. Lower LTV means more equity has to evaporate before you’re at risk. Also confirm the property’s condition, occupancy, insurance, and whether property taxes are current, since unpaid taxes can jump ahead of your lien.
3. Your lien position: first, second, or further back?
Position determines who gets paid first if the loan defaults and the property is sold or foreclosed. A first-position deed of trust is repaid before any junior lien. A second-position loan only gets paid after the first is made whole — which can mean a total loss if there isn’t enough value to go around.
Confirm your position in writing and match it against a current title report. Ask what other liens, loans, or assessments are recorded against the property, and add them up. If you’re being offered a second behind a large first, the combined loan-to-value — not just your slice — is what really measures your risk.
4. The paperwork: does it actually secure your money?
The final check is documentation. Money moves fast in private lending, and the protection you think you have only exists if it’s properly written and recorded. Before funding, make sure you can account for each of these:
- Promissory note stating the amount, rate, term, and payment schedule.
- Deed of trust recorded against the correct property — verify the legal description and parcel number.
- Title insurance (a lender’s policy) protecting your lien, plus a preliminary title report you’ve actually read.
- Hazard insurance with you named as a loss payee.
- Vesting and entity documents confirming who owns the property and who is authorized to sign.
- Escrow instructions so funds are handled by a neutral third party, not passed hand to hand.
Key takeaways
- The advertised yield is the last thing to evaluate — borrower, property, position, and paperwork come first.
- A conservative loan-to-value ratio is your primary protection if a loan goes sideways.
- Lien position decides who gets paid in a default; know exactly where you stand and read the title report.
- Never fund without a recorded deed of trust, a lender’s title policy, and neutral escrow handling.
- Working through a licensed Nevada arranger helps, but it doesn’t replace your own review.
Frequently asked questions
What is a safe loan-to-value ratio for a trust deed investment?
Lower is safer, because more borrower equity must be lost before your principal is at risk. Many private lenders look for meaningful equity cushions rather than lending near a property’s full value, and the right number depends on property type, condition, and how quickly it could sell in the local market. Always evaluate LTV alongside lien position.
What’s the difference between a first and second position trust deed?
A first-position deed of trust is paid before any other lien if the property is sold or foreclosed, while a second position is only paid after the first loan is fully satisfied. That makes seconds riskier, since a shortfall in value can wipe them out. Confirm your position in writing against a current title report before funding.
Do I need title insurance on a trust deed investment?
Yes — a lender’s title insurance policy protects your recorded lien against defects, competing claims, or errors in the title history. Skipping it to save cost removes one of your core protections. Always review the preliminary title report yourself and confirm the policy names you or your entity as the insured lender.
Is a licensed arranger enough to make a trust deed safe?
No single factor makes an investment safe. Working through a Nevada-licensed mortgage broker adds regulatory oversight and structure, but you still owe it to yourself to verify the borrower, value, position, and documents. Treat the arranger as a partner in diligence, not a substitute for it.
Thinking about funding a trust deed in Las Vegas?
If you’d like a second set of eyes on a private-capital opportunity — or you simply want to understand how these deals are structured before you get an offer — I’m happy to walk through it with you. Reach out through the Contact page or the Private Capital page to start a no-pressure conversation. And if you found this useful, subscribe for future posts and follow along on Instagram and LinkedIn.
Beau McDougall is Executive VP of Private Capital at All Western Mortgage (NMLS #2611909). Educational only — not investment or financial advice; all investments carry risk.
