Q: How much risk is there in trust deeds?
A: That is a good question and something important to understand. The loans we offer are real estate secured trust deeds. The way we manage the risk in the trust deeds we offer is by confirming the value of the property being used as collateral to secure the trust deed. In addition to an appraisal we check the comps in the area and the property itself. We also feel that we can manage the risk by keeping the loan to value low. Our residential and commercial loans are at 50-70 cents on the dollar to the value of the property. Most of our raw land loans are at 50 cents on the dollar to the value of the property.

Q: What is your minimum to invest?
A: Most of our investors begin with S50,000 or more. Some investors who are just getting to know us will start with S25,000 and then once they are comfortable with the process they invest more. Our average investor has approximately S250,000 invested.

Q: What if DBI goes out of business?
A: As an investor you are the one on the trust deed and the promissory note. If DBI were to go out of business your investment is still secured by the property.

Q: When is interest paid?
A: Most loans pay interest monthly. Some loans may have all interest paid up front at the close of escrow. It depends on the terms of the loan.

Q: Do you get your own appraisals?
A: Most loans come to us with an appraisal done. We do an appraisal review and scrutinize the appraiser. We will also pull our own comps for the area. If we feel that the appraisal is off from what we think it should be we can order our own appraisal.

Q: What is the process if borrower does not pay?
A: When payment is five days late a notice is mailed to borrower. When loan is ten days late another letter is mailed to borrower. When loan is fifteen days late calls are made and letter mailed to borrower. If payment is not brought current by the 21st a notice of default is filed and foreclosure process is started. Once all requirements are filed property is sold in 120 days.

Q: What happens when loan is paid off?
A: We are required to mail to investors their final payment, with principal and interest, when it is made.

Q: What types of loans do you make?
A: We have three main types of property that we will loan on, residential, commercial and raw land. Our residential loans are a five year loan with graduated interest. Commercial and raw land loans are for a period of 12-24 months.

Q: What is your average return on your loans?
A: Our loans range from 11% to 14% with 12% as the average yield on most loans.

Q: What fees am I charged as an investor?
A: Our investors pay no fees to create the loan or sendee it. All those expenses are paid by the borrower. If you invest $100,000 the full amount goes to work for you.

Q: How do I get started?
A: We need you to complete the application and appropriate disclosure forms. Once they are on file we can open an account. We will send you loans as they come available via email, fax or phone call. Once you select a loan to invest in we need you to send us the funds via wire or cashiers check, if there is enough time for the check to clear the bank you can send a personal check.

Q: How many loans have you had to foreclose on?
A: To date we have not gone to foreclosure on any of the loans we have made. We have started proceedings but the borrower has sold the property or obtained other financing before the foreclosure process was completed.

Q: What if they file bankruptcy?
A: In the paperwork signed by the borrower there is a statement regarding bankruptcy. This form has been successfully used in the past to have property removed from bankruptcy process to allow us to foreclose. On such short-tenn loans it would be looked upon as fraud to get a loan and then file bankruptcy.

Q: What if they homestead their property?
A: Homesteading only applies to debt that is not secured by the real property. Homesteading protects from credit card debt, car loans, department store accounts, etc.

Q: When will I receive my monthly payments? A: Payments are due to DBI by the 5l of the month. Once we receive the check we clear the funds with the bank and then they are mailed or direct deposited to investors.

Q: Do you have direct deposit?
A: We have the ability to deposit funds directly to your checking account with the proper paperwork in place. We need you to complete an ACH form and attach a voided check and future interest payments will be paid directly to your account.

Q: What size of loans do you make?
A: We have made loans for as little as $50,000 to as much as $7,000,000.

Q: You have only been in business for a little over one year? A: I can understand how this might concern you. As all businesses we had to start somewhere. Our CEO, Jordan, has been making and investing in private money loans for over five years. About two years ago a couple of his larger investors suggested that he start his own business and that is how Diamond Bay Investments came to be. Is that a major concern? One of the benefits of working with a firm like Diamond Bay Investments is that you are the one on the trust deed and the promissory note, not DBI. Jordan is a substantial financial person and has his own money invested in many of the trust deeds underwritten at DBI.

Q: What is a Trust Deed Investment?
A: A Trust Deed, known as a "deed of trust" is a document recorded against a specific property or group of properties with the county recorder's office, encumbering the property(s) with a loan. A deed of trust is the document that secures the collateral against the promissory note. An investor, or a group of investors, may fund a loan on real property (real estate). Upon execution of the documents, the investor will then own all of, or part of the loan, including the principal balance as well as the profit from the interest. Typical trust deed investments will yield an investor between 9% and 12% annualized, with monthly interest income.

Q: What are the benefits of investing in Trust Deeds?
A: Investing in Trust Deeds has several benefits. First, the security of the investment is real property (real estate). Unlike stocks, commodities or other volatile investment vehicles, trust deed investments are secured by real estate. The overall real estate market has grown and increased (appreciated) in value for hundreds of years. Although sometimes market slow-downs and slight decreases in value do occur, statistically they rebound and recover quickly, as compared to stocks or other investment opportunities that may never recover. The next benefit of investing in trust deeds is cash-flow. DBI will send your interest check each month, upon payment from the borrower. Because you receive a monthly check, your interest earned can be used as residual income.

Q: How do Trust Deeds compare to other investments?
A: Trust Deeds have a reputation for being fair yielding and lower risk investments. Yields can range widely, however standard yields range between 11% and 14%. When comparing Trust Deed Investments to stocks, there are many differences. Stocks have a potentially large upside.. .returns can often exceed 12%, but the risk also increases. In addition, stocks vary in value on a daily basis. There are many outside and unpredictable factors that determine the value of a given stock. For example, a company may file for bankruptcy thus reducing your capital value by 50% in a single day. When investing in tmst deeds, borrowers may go bankrupt but properties do not, and real estate market values do not shift violently from day to day. Interest rates on government insured CDs, bonds and bank accounts are less than the yield of trust deeds. CDs have recently yielded 2-4%, compared to 9-12% in trust deeds, and about 1% in bank savings accounts.

Q: How much should I invest in each trust deed investment?
A: Diamond Bay Investments has long been an advocate of "diversification." We feel that it is better to own portions of several trust deeds, versus one large sum of a single trust deed. This will spread your investment into several areas, which diminishes the possibility of significant loss. You may also choose to invest in various geographic areas, which will give you different market conditions to vary your portfolio. Additionally, different types of property may also help diversify your investment portfolio. Depending upon your comfort level and capability, you may want to invest as little as $25,000 or as much as $10 Million.

Q: Why would a borrower pay such high interest rates, when banks will lend for less? A: There are many reasons why borrowers come to Diamond Bay Investments for loans versus other lending institutions such as banks. These reasons include:

• Fast Loans
• Short Term & Bridge Financing
• Credit Issues
• Property may have conditions prohibitive to getting a bank loan and
• Flexible terms
  
  Q: I have heard of first, second and third trust deeds. What are the differences? A: The difference between first, second, and third trust deeds is the priority of lien you hold against the property. For example, a first trust deed gives you FIRST priority above all other liens (except property taxes). A second position gives you SECOND priority above all other liens (except property taxes). DBI rarely funds second mortgages due to the higher risk. However, circumstances may present a very good opportunity for lenders to encumber a property by a second mortgage. Although we do consider second mortgages, our primary focus is on First (1st) trust deed positions with less risk. Third lien positions can be even more risky, because a third position takes a "back seat" to both first and second lien positions, plus any potential tax liens. Diamond Bay Investments strictly prohibits third position trust deed investments from our portfolio.
  
  Q: What should I be looking for when evaluating a potential trust deed investment, and what does Diamond Bay Investments look for?
  A: What Diamond Bay Investments looks for should be the same things you look for. We have strict underwriting guidelines as to what we will loan on. First, we look at the type of property. We often lend on properties such as homes, condominiums, land, lots, apartment buildings, commercial, industrial properties, and churches. All of which may be placed on the market for resale. The general philosophy of private money lenders is "loan to own." If we look at a foreclosure situation, we do not want to end up with a property that will be difficult to sell. Properties that we try to stay away from are health clubs, rural non-recreational properties, go-kart tracks, etc. Second, we look at loan-to-value (LTV). The primary consideration in private money lending is generally the LTV. The amount of equity that is used to collateralize the loan is the absolute most important part of any underwriting decision. Making a loan of a high LTV such as 85% or more could equate to a very high risk. Primarily our target LTV is 70% or less, depending upon the specific property. For example, if a borrower was purchasing a home for $400,000, we would take $400,000 X .70 = S280,000 loan amount. This leave $120,000 in equity between what we lent and the actual value. Finally, the strength of the borrower must be carefully evaluated. We look at each borrower's circumstances and ability to repay the mortgage. We always require a "vested interest" in the property or project, so that the borrower has a significant risk involved if he or she does not make the payments. Depending upon the loan, tax returns, financial statements, assets and a credit report may be reviewed to determine the strength of the borrower. With all other things considered, Diamond Bay Investments is primarily a collateral based lender, with less emphasis on credit and income documentation.