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Retirement Investments: Use Your IRA for Trust Deed Investments


Retirement Investments: Use Your IRA for Trust Deed Investments

When it comes to Retirement Investments, you don’t want to invest in a risky endeavor. That’s why trust deed investing is so popular. Instead of investing in stocks, bonds, and mutual funds, you can invest into alternative assets like notes backed by real estate. With a self-directed IRA, you can invest your money the smart way. What makes trust deed investing so smart? It’s backed by real estate which means it’s secured. The property serves as collateral which means that you would get the property in the event of a default. It’s not likely, however, that a default will occur but you can have some peace of mind. A default is the worst case scenario and even then, you can sell the home in order to recoup your investment—maybe even make more than you originally invested.

A self-directed IRA is the same as any other IRA. It just means that you can choose your IRA investments. You can invest your IRA funds in any kind of investment, except for those excluded by law. Trust deed investments, however, are perfect for IRA investing. How it works is simple, the lender loans money to the borrower, who gives up the deed to a property as collateral for the loan. The interest compounds tax-deferred until the loan is repaid.

Trust deed investing is not a new investment strategy. Many investors have been investing in trust deeds for decades. It is a tried and true method to make passive income without having to deal with the hassles of being a landlord. Trust deeds are a very common form of investing with a Self-Directed IRA.

In the case of trust deed investments, the investor essentially becomes the bank. With trust deed investments, the borrowers pay you high interest rates. The amount of the interest rate and the specific time of repayment are agreed upon by the borrower and lender and the lender can expect to receive these payments monthly until the loan is paid off. The borrower pays these high interest rates because of the fast service and the ability to bypass the strict regulations of traditional lenders.

Experienced trust deed investors should feel secure in their trust deed investment because it is real estate based. They can negotiate the interest rate, the length of the loan, the late fee, the default interest rate, and the fees.

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