When investing in a trust deed, the investor is buying someone else’s real estate loan, which is secured by a trust deed which makes it a great investment strategy. When a real estate investor purchases trust deed, they are setting up a relationship as an intermediary between the original lender and the borrower.
The three attributes any savvy investor should look for in an investment are as follows: simplicity, consistency, and stability. Lucky for you, trust deed investments have these three characteristics.
Trust deed investing is when investors invest our money in Trust Deeds secured by real estate. Basically, the investor becomes the bank and they can earn a much higher interest rate than a conventional bank. With a trust deed investment the investor is acting like a bank by lending money to a borrower. The investor is able to earn a steady stream of passive income while securing those funds with the underlying real estate asset. It’s that simple. There is no hassle of buying, refurbishing, or reselling. Even if the borrower defaults, you take procession of the home.
Investing in trust deeds provides a steady stream of passive income. Typically, it provides consistent monthly cash flow you can rely on. If payments stop, the investor recovers capital by foreclosing on the underlying valuable real estate. While the investments are generally short-term, investors can receive their profits quickly and then re-invest in another trust deed.
Investors can enjoy a consistent stream of passive income in the form of monthly interest payments on their invested capital. Returns are considerably higher compared to other fixed income investments. Real estate collateral is often viewed as more secure than stocks and equity investments, because its value can never diminish to zero.
While the stock market can be volatile, investors can Diversify Investment Portfolios and find control in their investment decisions when it comes to trust deed investing. Investors can tailor their investments to their investment objectives and comfort level. Trust deed investments give investors control and security.
Basically, investing in hard money Trust Deeds is like investing in a bond. The Trust Deed will yield you monthly payments with returns above what traditional Trust Deeds offer. In addition, the principal balance is paid back to the investor in a relatively short duration.
Investing in real estate loans is much easier to understand than other, more complicated investments but investors should always have an understanding of the nature of the investment and its risks and rewards. There is always risk involved with any investment but if you are looking for an investment with relatively low risk and big potential profits, trust deed investing may be right for you.