Here are the Answers to Your Trust Deed Investment Questions
If you decide to start investing in real estate and you have hard money loans and trust deed investment questions, here are your answers:
What is Trust Deed Investing?
Real Estate Trust Deed Investing is when investors invest our money in Trust Deeds secured by real property and insured by a Title Insurance Company. Basically, the investor becomes the bank and they can earn a much higher interest rate than a conventional bank.
Can I invest retirement funds?
Yes. Using funds from your IRA to invest in trust deeds is a great way to make a profit for your future because earnings accumulated in IRA retirement accounts are frequently tax-deferred or, in some cases, tax-exempt from federal and state income taxes. This can be a great help when you are in the process of Retirement Planning.
Is trust deed investing safe?
The loans are secured by real estate which makes it a safe investment. Trust deed investors make a higher interest yield than would typically be obtained by a regular bank and is secured by the borrower’s equity in the real estate transaction.
How do I make money?
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.
Investors 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.
Can I choose what properties to lend on?
Yes, by investing in trust deeds rather than investing through a mortgage pool you will be able to make decisions on individual loans with regards to whether or not you wish to invest. You can verify the borrower’s representations about capacity to pay. You should examine their verification of employment, income tax records, verification of cash deposits, and any statements from existing lenders reporting amounts owed. According to the California Department of Real Estate, “When considering the borrower’s capacity and desire to repay, you should ask whether the borrower has, immediately preceding the request for the loan, borrowed a substantial amount of money. A significant amount of concurrent borrowing may indicate the borrower is experiencing difficulty meeting his or her financial commitments.
How can I learn more?
Contact the specialists at HML Investments today for more information about trust deed investments.