Having trouble viewing this email? Click HERE.

Mortgage Investment Opportunities Since 1980



Lower-Yielding Trust Deeds Produce a Higher Yield. What?

August 5, 2020

We here at Blackburne & Sons would very much be in your debt if you were to forward this short lesson in trust deed investing to your accredited investors friends. Thank you!


Joke Du Jour

I may not be that funny or athletic or good-looking or smart or talented... I forgot where I was going with this.


Blackburne’s Law says, “A portfolio of 8% and 9% first trust deeds will outperform a portfolio of 11% and 12% first trust deeds over a seven-year holding period.”

Over a seven-year holding period, you are almost certain to suffer through a garden-variety recession. It is during recessions that first trust deeds get stressed, and properties come back in foreclosure. Foreclosures mean loan losses. Loans with higher interest rates - and hence higher monthly payments - are much more likely to default.

The losses that the high-yield-seeker will suffer will usually more than eat up any extra interest that he earned. Therefore it really is true that lower-yielding first trust deeds often yield more than higher-yielding ones.

“Gee, George, every time you write to me, you scare me out of investing in first trust deeds. Are you nuts?” Folks, I honestly believe that first trust deeds offer one of the best risk-return tradeoffs in the investing world. Even an 8% first trust deed is yielding at least 7% more than you earn in bank C.D.’s. The poor retired folks in Europe now have the pay the bank to hold their deposits. Yikes.

When you invest in stocks, the dividend income is paltry. If you are retired, you may have to sell some of your stock and pay income taxes, just to have income upon which to live. In contrast, when you invest in a successful first trust deed, you get interest income upon which you can live without eating your seed corn.

I genuinely think that first trust deed are the cat’s meow. Just don’t be foolish and reach for high yields.

Be careful here, folks. No guarantees are implied. Blackburne’s Law is not backed by any rigid statistical testing. It’s actually just a hypothesis, based on my forty years of making hard money loans. These weasel attorney words being said, Blackburne’s Law is a piece of advice that you would be very wise to always remember.


Investing in first trust deeds involves substantial risk. Be sure to read the “Risk Factors” section of the Offering Circular carefully before investing. Foreclosed property almost always requires renovation, so be sure to maintain some liquidity. A substantial and prolonged decline in real estate values is possible.


Schedule a Zoom Meeting With Angela Vannucci




P: (916) 338-3232

F: (916) 338-2328

CA DRE #1425852 / NMLS #389465


Realty Capital Corporation


4811 Chippendale Drive, Suite 101

Sacramento, CA 95841

CA DRE #00829677 / NMLS #103430

Won’t you kindly forward this email to a few of your accredited investor friends?