Trust deed investing is a great way to make passive income but how do you get started? Also, since you’re new to trust deed investing, you probably want to know exactly what it is.
Trust deed investing is simply investing in loans secured by real estate. Most trust deed investments are relatively short term loans (maturity under five years, with many loans two years or less) made to professional real estate investors.
In the current economic climate professional real estate investors are buying properties at foreclosure sales for bargain basement prices, fixing-up these properties, and reselling them for a profit.
Basically, you act as the bank. You’re the one providing funds that are being used as a loan for real estate investors and you make money from the high interest rates.
So now that we know what trust deed investments are, let’s talk about how you get started.
If you don’t have hundreds of thousands of dollars, that’s okay. You can start by investing $10,000, $1,000 or even $500.
The answer is fractionalized trust deed investing. This is a type of trust deed investment where multiple investors contribute funds for a loan or multiple loans. This is perfect for those who want to invest in real estate but only have a small amount to invest.
Here are just a few of the pros: you will be investing with other investors and you can meet with your fellow investors in order to make decisions in regards to the trust deed investment.
You will also be earning money from various pools that you invest in which will teach you a lot about the process and the real estate investment business.
The reason why fractionalized trust deeds are popular is because it is just like a traditional trust deed investment and the process goes just as smoothly, as long as the broker handles the origination and servicing properly. It’s a great opportunity for a new investor who is looking to break into the business.
Here’s what MarketWatch has to say on the issue: “consider purchasing a “partial,” such as the next 12 payments on a on a note from someone who has been laid off temporarily or is paid on a seasonal basis. Contact note brokers and let them know of your interest. Other sources would be real estate brokers, mortgage brokers and lenders.
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Bonus Real Estate Tips From Yanni Raz