Make a Smart Investment: Trust Deed Investing Options

Make a Smart Investment: Trust Deed Investing Options

By | 2017-03-16T17:26:22+00:00 March 16th, 2017|Trust deed investments|Comments Off on Make a Smart Investment: Trust Deed Investing Options

Make a Smart Investment: Trust Deed Investing Options

There are many trust deed investing options that any investor can get involved in. 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. In the current economic climate, savvy real estate investors are purchasing properties at foreclosure sales for bargain basement prices, refurbishing these properties, and reselling them for a profit. These house-flipping investments take a matter of months which means hard money loans are perfect for these types of investors. Trust deed investors help these real estate investors get financing and make a profit and the trust deed investors make money from the interest rates.

Individual Trust deed Investing

Investing in an individual trust deed may yield a higher return than investing in a fund. This is the preferred approach active investors who have deep knowledge of real estate investing. Since each loan requires analysis and due diligence, it can be easier for a first time investor to invest in a fund. Another aspect of investing in individual trust deeds is that it requires the constant sourcing of deals so that when one loan pays off, you can reinvest in another. A fund manager can help you with new deals.

When structured properly, trust deed investments can yield a steady stream of passive income—much more than savings accounts or certificates of deposit. Trust deed investing has relatively low risks, investment portfolio diversification, and measurably higher yields are all attributes of trust deed investments.

Fractionalized Investing

Another one of the trust deed investing options is fractionalized investing. Fractionalized investing is a investing of group of investors in which each provide funding for the investment. This type of investment is suitable for small investors because they do not have much funding for huge investments. Major benefit to fractionalized investor is to make better decision because collection of minds can take better decision for investment.

Fund Investing

There are some potential advantages of a mortgage pool investment over individual trust deeds such as diversification and longevity but there are some risks to be considered when it comes to individual trust deeds. Structuring the fund properly is a huge challenge for most trust deed originators turned first time fund managers. This can lead to problems down the road. Choosing the right manager with the right strategy is the most important part of investing in a fund. What you want to look for when choosing a manager is experience, communication, fast processing, adequate capital, and flexibility. Find out more here.

In funding investment, none of the investors involved will invest the entire amount. Due to diversification investors are like to invest in verity of sources.

Funding with Retirement Accounts

A trust deed financial agreement between a borrower and private investor in which the promissory note is backed by a deed of trust recorded on the property. The borrower promises to pay an agreed upon interest rate on the loan and must repay the initial amount at a specific time. If the borrower defaults on their loan obligations, the IRA owner will take possession of the home once the property goes through foreclosure. While investments inherently involve risk, trust deeds may offer an IRA owner the opportunity to recoup a portion or all of their original investment through the sale of the property.

Diversifying your portfolio through private lending is becoming an increasingly popular alternative retirement investments and you can do this by self-directed IRA trust deed investing. You can earn a passive income from interest while securing your investment with a deed of trust on the property. Luckily for those who are not interested in the hassles of flipping houses, traditional real estate investing is not the only route to take. You can invest in trust deeds with a self-directed IRA and trust deed investing is a widely used for of real estate investment that provides flexibility and security.

About the Author:

Yanni Raz is The Founder and CEO of HML Investments, with over 15 years in the real estate and hard money lending industry, Yanni is an expert in real estate investing, trust deed investments and more.