Understanding Trust Deed Investments: What You Should Know
Understanding Trust Deed Investments doesn’t have to be difficult. In fact, trust deed investing is a very simple concept to understand. Are you ready to generate passive monthly income now? Here’s what you should know.
Why invest in trust deeds?
Trust deed investments are a great way to diversify investment portfolios, generate passive monthly income, minimize the risks of investing, and produce higher return rates than other investments.
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 getting approved for a loan from a traditional lender can be extremely difficult, there is a high demand for specialized loans from alternative lenders. The investors who apply for these loans are experienced and savvy real estate investors who are looking for a short-term loan for their project. Because these loans are funded quickly and are short-term, the interest rates are high. With trust deed investing, you essentially become the bank and you can charge these high rates and the borrower will pay them.
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. What makes trust deed investments different than other investments is that they are secured by tangible real property. The borrowers are not likely to default because the risk of losing the property is a strong incentive to keep up with payments.
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.