In the United States, there are two types of real estate transactions, true mortgages and deeds of trust trust deed investing
. This type of investing differs from a true mortgage in that there are always three parties involved, the bank or lender, the borrower and a third party who is investing his/her personal capital in the deed of trust. If you want an investment that pay for college, investing in deeds of trust
can be an opportunity to earn high interest rates with low investment risk.
sale. In a true mortgage sale, there are two parties involved, the bank or lender, and the borrower. The borrower is given the deed to the property he/she is purchasing and the lender has very little security or collateral. A second form of real estate investing is called
During trust deed investing
, an investor acts as a third party during a home purchase transaction. The bank loans the money, the borrower purchases the property and repays the loan, and the investor, or trustee holds the deed to the property. The trustee holds the deed as security to ensure the repayment of the debt to the lending bank and the bank pays the trustee interest for this service.
Trust deed investing
boasts high rates of returns on investment and can fit almost any budget. An investor typically earns anywhere between 7% and 12% on trust deed investments. This is significantly more than any savings bonds, savings accounts, and most stock options.
Investing in trust deeds
is generally considered to be a fairly safe investment strategy because the investment is backed by actual real estate collateral. An investor can literally drive by and see his/her investment. The trustee can also help insure his/her investment in trust deeds by having property appraisals and working with a licensed broker for the transaction. Another way to secure the investment is to invest only in the first position in the deed of trust. The first position ensures that this trustee will be paid first in the event of a default.
Call your broker to add trust deed investing
to your child’s college fund portfolio. Start earning higher interest rates with less risk today.
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