Trust Deed Investing – Benefits and Risks
Are you interested in Trust Deed Investing?
October 31, 2014What do I need to do before I begin Trust deed investing?
November 3, 2014Trust Deed Investing – Benefits and Risks
What are the risks of Trust Deed investing?
There are many risks if you choose to pursue Trust deed investing. A very big one is that this is not a liquid investment. That means that you cannot cash this in for immediate capitol
like you would be able to with a government bond or shares in a company. No, this is one investment that you have to ride it through. You will have to wait until the borrower pays of the loan, or in the event such as a foreclosure, sold the property.
Another risk comes with the legal side of things. If there is any error in the documentation or due diligence of the trust deed investing papers, than there is the potential for great risk. You may face litigation or title disputes which may force you into court. Such legal matters are expensive, but they would be necessary to protect your investment. A lot of people are involved with trust deed investments, and if one or more of them are not trustworthy, you could have a potential loss on your hands.
One of the most likely risks is that the borrower defaults on the loan. Then it will be up to the investor to sell the property. Best case scenario is that the amount of the loan will be recovered, but oftentimes, there will be a loss.
How can I decide if this is for me?
Do the risks outweigh the profit opportunity in Trust deed investing?
There are a lot of risks involved in Trust deed investing. They take a lot of time and knowledge and hard work to be successful. But the potential profit is very alluring. Be sure to take the time to fully understand what you are getting into, find good solid people who have a knowledge of the business, and you will have the opportunity to make a lot of money! If all of this sounds like something you can do, than Trust deed investing may just be for you!
