Trust Deed Investing
Trust Deed Investing
With the continued uncertainty of the Stock Market, many investors are looking for safer and more lucrative ways to invest their money. Trust Deed investing also known as private note investing offers an individual the opportunity to earn higher returns on their money at a lower risk. Trust Deed investing is done through Trust deed investment companies, who work with a multitude of potential mortgage borrowers to find lending opportunities that are safe and profitable. This type of lending is known as hard money lending, where individuals (investors) fund mortgages on a short term basis for relatively high rates of return.
Trust deed lending is fairly low risk because the hard money loans are backed solely by the appraised value of the property. In case of foreclosure, the property is sold or rented to recover the funds. Trust Deed investment companies have a lot of experience in making these loans, and carefully analyze the borrower and the property prior to making any loan. The value of the real estate is appraised for its quick sale value to assess risk. The loans are conservative, generally given at about 65% of the appraised value. Potential borrowers provide an exit strategy before the loan is given to further reduce the risk of the lender.
Trust deed investing provides a higher rate of return than standard investments. Hard money loans can be obtained very quickly, much more so than a standard mortgage, require minimal paperwork, and are backed by the value of the property rather than on the borrowerâs credit rating. In exchange for this convenience, the borrowers pay a higher interest rate, giving the lender a greater return on investment. Generally, hard money investments return at a rate of around 12 to 15 percent or higher. Additionally, since these loans are short term, an investor can fund several loans in a given year, resulting in multiple compounding of the initial investment per year. Contrast this to investing in a CD which compounds annually. The higher interest rates and multiple compounding make the rates of return for trust deed investing much greater than standard investments.
Donât waste any more time checking your stock prices, consulting stock brokers, or worrying about fluctuations in the market. Trust deed investments are basically hands off. The rates of return are set at the beginning of the loan, and the details are handled by the trust deed investment company. Hard money lending is tried and true; it predates the stock market, and gives the individual a safe and lucrative way to invest their money.