Pitfalls of Trust Deed Investing – Can you actually make money
How to Make Money by Investing in Deeds of Trust
November 17, 2014What is Trust Deed Investing aka Investing in Deeds of Trust
November 17, 2014How Can I Make Money by Investing in Deeds of Trust?
We all want to make the right kind of choices with our money. Sometimes it is hard to know what can be the best option for your money and how you can best make a profit. With the struggling economy, it is more important than ever to thoroughly research your options.
- Setabay Loan Trust Deed Investing
Many experts think that investing in deeds of trust is a great way to make the invested money back, along with a good amount of return. You will want to understand how most people are making money by investing in deeds of trust.
The process of making money by investing in deeds of trust you are becoming the bank.
- Trust Deed Mortgage Broker
You are just the bank for someone else. The bank makes money by using the money its customers puts in savings and then lends it out in loans to other customers. They have to pay a small amount of interest to the customers but they get a larger amount of interest from the loans. As a trust deed investor you will be doing the same thing but without having to pay out interest. You will just make money! Like banks however, you will secure your loan with a promissory note secured by a recorded Deed of Trust. When they do this, they have a limited risk because they will get the property on the note is they are not paid. You will also have the same limited risk. This is exactly what you will be doing with a little more risk, but a chance of a higher profit. Instead of using other people’s money you will be loaning out your own. All the money comes to you, instead of the bank, and minus the small amount of interest paid on the deposited money.
What do I need to get started investing in deeds of trust?
There are some restrictions in some states on how investing in deeds of trust can work for an individual. For example, in California, no one trust deed can be worth more than 10% of your net worth. So you cannot have more than 10% of your total net worth invested in trust deeds.
How much money you will make per year depends on the length of the individual investment. Some investments last for only three months and some will last for several years, depending on what you choose to pursue and someone interested in investing in deeds of trust.
What are some of the risks? What do I need to be aware of before I begin investing in deeds of trust?
There are some risks, but if you are aware of them you can make a plan to lower some of the risks. Here are a few of the biggest risks that come with investing in deeds of trust.
- Investing in deeds of trust can be an unstable investment. It will be impacted by the fluctuating market conditions. Real estate values will most likely go up and down. There will be times when it will help you, but there will be other times when it may hurt your profit margin. And you will need to realize that not only the present market, but the future one may affect your investment as well. These can be difficult to predict, even for the most knowledgeable.
- You will also find that many people are hesitant to purchase. The problems with the current economy are going to impact your profit margin. However, most trust deed investors can certainly benefit from this current market trend! It is because of the poor economy and the resulting foreclosures that make the amount of money you can make possible. Because the banks are unwilling to loan, you can charge higher interest rates.
- Bankruptcy is also a big concern. If your borrower files for bankruptcy your investment will be a big problem. It is very important to be sure that all the paperwork is in order. Make sure you have the title to the property they have borrowed on so that if there is any kind of problem with payments, your investment will still be protected. This is a good choice for all interested in investing in deeds of trust.
- Natural disasters and environmental concerns can be a danger to your property investment. Avoid known locations for natural disasters like hurricane zones, earthquake areas, tornado ridden counties, and overdevelopment on hills that may lead to a landslide. To help mitigate any problems with Mother Nature, invest in some home insurance to take the edge off should something happen.
Investing in deeds of trust can be a good opportunity, and as long as you make a plan to avoid these risks, you can make a lot of money.
- Mortgage Broker
