Here’s What Makes Trust Deed Investments Valuable to Investors
What makes trust deed investments valuable is that they allow investors to go beyond stocks and bonds and diversify your investments. If you have just discovered this interesting alternative investment option, here are a few reasons why you may consider if it’s right for you.
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.
If you do not want your money tied down for a long period of time, trust deed investing is a good investment to consider. Though they vary in length, they are traditionally between 6 and 24 months. After you make a profit from your investment, you can choose whether or not you want to invest your money in trust deeds again to make more returns.
Experienced trust deed investors should feel secure in their trust deed investment because it is real estate based. In addition to helping Diversify Investment Portfolios, trust deed investing also allows investors will also find that the terms of the loan can be flexible. They can negotiate the interest rate, the length of the loan, the late fee, the default interest rate, and the fees.
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. Trust deed investments give investors control and security.
Trust deeds yield more than bonds
Individual trust investments are considered too small to interest large corporate or government investors. For this reason it would be difficult for large institutional investors to put a lot of money to work into trust deeds. The deed market is generally monopolized by smaller investors who, with the right professional guidance, can ascertain the risk, value and expected return to be garnered from particular investments. Since trust deed investments do not offer instant liquidity, it makes the market even more exclusive since they are tied in to the completion of particular real estate projects. It turns out that the universe of such investors is fairly small compared to the universe of borrowers who are seeking private money loans. Available trust deeds are in the hands of smaller group of investors, who stand to gain from high annualized returns. Anyone can get started in trust deeds investments.
Another reason that makes Trust Deed Investments Valuable is, because the borrowers are savvy investors, they are ready and able to repay the high interests rates that you require. Real Estate Trust Deed Investing is a win/win because the lender earns substantial interest on their money and the real estate investor has a source where they can get their money fast to close the deal without the hassles of traditional financing.
The Californian real estate market offers plenty of potential for Real Estate Trust Deed Investing. Find out more here.