These are Some of the Many Trust Deed Investing Advantages
Trust Deed Investing Advantages: Trust deed investing is simply investing in loans secured by real estate. Most trust deed investments are relatively short term loans (maturity under five years, with many loans two years or less) made to professional real estate investors. When it comes to trust deed investing, you essentially become the bank and that allows you to charge higher interest rates than a bank might. Trust deed investing allows you to invest in real estate (which is always a good idea) without having to deal with the hassles of being a landlord.
You and the borrower agree on the rates and the terms then you collect your income monthly then receive the entire loan on a specified date. Trust deeds rates yield are generally in the 9%-12% range.
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.”
Diversifying your portfolio through private lending is becoming an increasingly popular alternative retirement investments and you can do this by self-directed IRA trust deed investing. You can earn a passive income from interest while securing your investment with a deed of trust on the property. Luckily for those who are not interested in the hassles of flipping houses, 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.
Trust deed investors should feel secure in their trust deed investment because it is real estate based. In the event of a default, the borrower is required to surrender the property to the investor and the property can be sold in order to recoup the initial investment.
When investing your IRA or pension funds in trust deeds, the interest income are tax deferred or tax exempt from federal and/or state income taxes.