[titleWhat Does Trust Deed Investment Mean?]
Investors have many options when it comes to where they put their money. Gold, the stock market and mutual funds are popular investments. We all know about these types of investments because they are everywhere. However, you may have not heard of trust deed investing.
Although Trust Deed Investinghas been around for hundreds of years, it’s not one that is advertised. Trust Deed Investingis investing in loans that are secured by real estate. A loan made with a trust deed investment is similar to a home mortgage loan. The main difference between these two loans is that there are three parties involved in a trust deed: the trustee, the lender, and the borrower. The trustee is the holder of the deed while the loan is being paid. The lender is obviously the one financing the loan. And, of course the borrower is the one who owns the property being put up for collateral and borrowing the funds.
There is also a promissory note that clarifies all the terms and conditions of the loan. In case the borrower defaults on the loan, the trustee is the one that would begin the process of foreclosure. The difference in a conventional mortgage and a trust deed loan is in a mortgage, the lender has to go to court to begin the foreclosure on the property being held as collateral.
Trust Deed Investingis popular, with people who know about it, because it pays a high rate of return and the investment is secured by real estate. Typically, once the loan has been made, the rate of return won’t change. You may invest in a trust deed that has a term of 18 months and you would receive payments for each month for the interest the borrower is being charged.
Investing in trust deeds basically means you are loaning your money against collateral. The collateral, which is real estate or land, protects the lender’s investment. It is, however, imperative to consider the value of the collateral. It is also crucial that a trust deed investor reflects on the amount of money they are loaning in comparison to the value of the real estate that is securing the loan. The underwriting process typically handles this, however it is always a good idea, as an investor, to do your homework and pay close attention to the details.
If you are looking to invest in something with fast returns and pays a high rate of return, Trust Deed Investments may be for you.
Typically, the minimum investment for Trust Deed Investments is around $10,000. However, some firms require a minimum of $100,000. The exact amounts will vary from broker to broker.
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.