You want to invest because you want to make money. But how do you know what to invest in? Trust deed investing is a great way to make passive income from real estate investments without any of the hassles of being a landlord. It also provides investors with security, flexibility, and substantial cash-flow. Trust Deed Investing is when investors invest your 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.
- Diversification: The stock market can be volatile and unpredictable but private real estate investing is a more stable investment and offers diversification for your portfolio. Stock market whims, global politics, and long-term real estate trends don’t have an impact on the ROI.
- Collateralization: What makes these loans so attractive is that they are collateralized by real estate. The investment is secured against the appraised real estate. In the event of a default, the investor takes possession of the home and can sell it in order to recoup their investment.
- Profitability: These loans are short-term which means that investors can earn passive income without typing up their money for years. As of 2011, investors can receive returns of 9-12% on trust deeds with a solid margin of safety (loan-to-value of, say 65% or less). Even higher returns are possible for professional trust deed investors, because they invest frequently and have close relations with mortgage brokers and mortgage banks that create trust deed opportunities.
- Control: Trust deed investments are simple and secured loans that have been evaluated to protect the investor and the company who is in charge with structuring the loan. Now you may be wondering who exactly you will be lending your money to. The answer is simple. The borrowers are experienced real estate investors who are individually assessed by the company structuring the loan. You provide real estate investors with financing and you make money. It’s a win/win.