Trust deed investing is a great way to make passive income from real estate investments without any of the hassles. With a trust deed investment the investor is acting like a bank by lending money to a borrower and the loan is secured by real estate. The investor is able to earn a steady stream of passive income while securing those funds with the underlying real estate asset. Here’s why you should Start Trust Deed Investing:
Diversify your investment portfolio
While the stock market can be volatile, investors can Diversify Investment Portfolios and find control in their investment decisions when it comes to trust deed investing. Investors can tailor their investments to their investment objectives and comfort level. If you Start Trust Deed Investing, you will enjoy control and security.
Generate Regular income
If you decide to start Real Estate Trust Deed Investing, you will make passive real estate income in one of two ways:
- The borrower pays back the loan in full.
- The borrower defaults on the loan and you foreclose on the property in order to recover your investment.
Those you Start Trust Deed Investing can enjoy a consistent stream of passive income in the form of monthly interest payments on their invested capital. Returns are considerably higher compared to other fixed income investments. Real estate collateral is often viewed as more secure than stocks and equity investments, because its value can never diminish to zero.
Minimize your risk
Compared to government or corporate bond issuance, individual trust deed investments are relatively small. The limited supply and high demand leads to a high yield for trust deed investors. The fact that there are less risks associated with the investments make Trust deed investments valuable. Trust deed investments usually earn high single-digit annual returns, paid monthly. In some cases, returns above 10% are possible. These returns are very favorable relative to other investment options with similar risk profiles. The risk of losing money in a trust deed investment is mitigated by a built in “margin of safety.”
If a borrower fails to pay their loan, the trust deed investor is protected by the margin of safety. Since you act as the bank, you can foreclose on the property and sell it to recover the investment and past-due interest. Because hard money loans are generally short-term, real estate values are unlikely to change dramatically over the loan’s term. When structured properly, trust deed investments offer an attractive current yield with relatively low risk which makes it a safe investment.