Make Money Now by Using Your IRA To Invest in Trust Deeds
Real estate investment is an excellent way to build wealth and equity while also diversifying your portfolio. However, not every investor wants to go through the hassle of buying and managing investment properties. Luckily, 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.
First of all, a trust deed investor is a person seeking a competitive rate of return by loaning private funds on real estate. In short, you’re the bank. The loans are secured by real estate. Trust deed investors make a higher interest yield than would typically be obtained by a regular bank and is secured by the borrower’s equity in the real estate transaction.
Unlike a mortgage, a trust deed investment involves the borrower, a lender, and the trustee. The third entity in trust deed investing, the trustee, holds the legal title to the lien on behalf of the lender until the loan has been repaid. In the case of a foreclosure, the trust deed investor takes possession of the home. While a mortgage would go through a judicial foreclosure, a trust deed goes through a non-judicial foreclosure. In the case of a mortgage, the borrower would have a right of redemption up to two years after the foreclosure date but this is not the case with trust deeds. Miami trust deed investments can be a great way to earn solid returns and diversify.
Here are the benefits of using your IRA to invest in trust deeds according to Accuplan:
- Secured By Tangible Property – Trust Deed investments are secured by a tangible property you can go and look at, “kick the foundation” and decide whether or not you would like to own if you have to foreclose.
- Safety – Low Risk As long as there is value in the property, your investment is secure. We never loan more that 65% of the value of the property, so you are assured that if it is necessary to foreclose, the property will be able to be sold to recoup the investment and make a profit.
- Great Returns – Depending on the type of deal, the borrower and the property, returns of 9-18% are typical. Past performance is no guarantee of future performance, and your returns may vary.
- Familiarity Many people are familiar with real estate investing because real estate ownership is so common. Stock transactions which produce the kinds of returns one can find in trust deeds often involve derivatives and complex financial instruments most people just don’t understand, or want to spend the time researching.
When investors use trust deed investing income to build their IRA, they create a consistent flow of passive and tax-free income. Trust deed investing with a self-directed IRA is relatively simple:
- A borrower executes a note payable to a private real estate investor, which is backed by a deed of trust.
- The borrower promises to pay back the total amount of the loan plus monthly interest.
- Monthly payments are directed to the IRA, which may result in a solid return.