Trust Deed Investment Facts You Should Know Before Investing
Before you get involved with trust deed investing, you should know the trust deed investment facts. 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.
It’s simple—you make an investment, you and the borrower agrees upon what the interest rate will be and then you collect your payments every month until the loan is repaid. 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.
The stock market can be incredibly volatile and unpredictable. Trust deed investing gives investors a great way to make money with a margin of safety built in. When structured properly, a trust deed investment can be a great source of passive income. The investor can take comfort in knowing exactly what the return will be for the duration of the note.
Because the property serves as collateral for the investment, investors will take possession of the property in the event of a default. They can then sell the property in order to recoup the investment. This means that you have absolutely minimal risk.
Some investors choose to personally source individual loans and lend money directly to real estate investors while others choose to purchase loans backed by real estate from brokers or invest in a fund that invests in trust deeds. Many individual investors choose to use funds and brokers because it gives them access to professional real estate investors that are investing on their behalf based on the specific investment criteria the individual investor has set.