Trust Deed Investment Benefits: What You Should Know
There are many trust deed investment benefits that you should know about before you start investing. With trust deed investments you can make passive income, you an diversify your portfolio, and feel secure in your investment. Here are some factors to consider:
When it comes to investing, real estate is always a good idea. A trust deed real estate investment strategy can provide diversity to your portfolio while also providing more stability than traditional forms of investment such as stocks.
Consistent Cash Flow
It’s simple—you make an investment, decide what the interest rate will be and then collect your payments every month. Trust deed investments offer an attractive yield on invested capital. If the borrower defaults on the loan, the property goes to you and you can sell it to recoup your investments.
Security of a Real Property
Why is trust deed investing so secure? Because the loans are secured by the property. Piece of mind can be illusive when it comes to investments but trust deed investors can rest easy lenders knowing that their investment capital is secured by real estate.
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.
Passive Real Estate Investing
Trust deed investors receive monthly payments at the agreed upon interest rate. These payments can be structured in various ways. One is partially amortized monthly payments containing interest and some principal; another is with a balloon payment balance delivered at the end of the loan term. When the borrower pays off the loan or the loan term expires, the investor receives payment for the principal investment and any remaining interest owed.
One of the trust deed investment benefits is that you 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.