An alternative investment such as Trust Deeds is an empowering means for introducing diversification, higher returns, and real estate into your investment portfolio. Entry into the world of deeds of trust opens doors to a wide spectrum of investment opportunities. If you are looking for things like higher returns and investment diversification, investing in Trust Deeds could be the wisest investment decision you make this year. Whether you
are a beginner or a seasoned investor, trust deed investing is a great way to ensure that your hard earned dollars produce a more consistent and fixed ROI.
If you are considering an investment of this type, you can expect a typical ROI of 8-15%. While you are investigating the benefits and disadvantages of trust deeds, it is recommended that you also consider conducting proper due diligence and finding a trust deed broker who has a national and a state license, and who is bonded and insured. Before attaining a trust deed, you should thoroughly research the property’s title status and market value. Reviewing the Preliminary Title Report will offer relevant information on liens, title issues, recent transfers, property taxes, and other factors that could affect the title and/or the marketability of the property and the trust deed. Additionally, while performing due diligence, both investors and borrowers must investigate any encumbrances that are excessive, any unsettled legal concerns, and/or any variations between the appraised value and the assessed value.
That being said, trust deeds function similar to that of the traditional mortgage. A trust deed investment involves the borrower, a lender, and the trustee, whereas a mortgage only involves two parties; the borrower and the lender. The third entity in trust deed investing, the trustee, holds the legal title to the “lien” on behalf of the lender until the loan has been satisfied. In the case of a foreclosure, the trust deed investor assumes ownership, while also gaining legal rights. A trust deed goes through a non-judicial foreclosure, and a mortgage goes through a judicial foreclosure and the borrower has a right of redemption up to two years after the foreclosure date. That is NOT the case with trust deeds!
A trust deed investor will earn a competitive rate of return on the investment – usually much higher than bank interest rates – because the investment is secured by the real estate itself. Experienced trust deed investors feel secure and confident in the investment simply because it is real estate based. Plus, investing in trust deeds allows investors to have a say the terms of the loan, by negotiating the interest rate, the length of the loan, the late fee,
the default interest rate, and the fees.
The high yielding investment offers investors two options; purchasing an existing promissory note which is called an “assignment of deed of trust and promissory note” or directly making a loan which is called a “trust deed investment”. Both methods are acceptable – buying a note gives you the opportunity to view the “payment
history”, while making a new investment gives you the opportunity to negotiate the terms.
Whichever method you prefer, trust deeds are well suited for most investors. They are accessible to both large and small investors through the use of “licensed mortgage brokers”; they are flexible, with the ability to be sold on the open market; they are profitable, with fixed rates of return between 8-15%; and most important, they are
a “secured” investment, which makes them one of the most valuable and profitable investments in any portfolio.
Investing in trust deeds has great potential to provide substantial returns with minimal risks and you will find that this investment vehicle has the potential to far surpass all other categories of investments in your portfolio.