The Basics of Trust Deed Investing
Trust Deed Investing with Limited Resources
December 10, 2014Minimizing Risk When Investing in Deeds of Trust
December 19, 2014Many smart investors incorporate the strategy of investing in deeds of trust as an easy and relatively low risk way to help grow their retirement accounts. With rates of return as high as 12% and real estate collateral, investing in trust deeds can be a good addition to a well-rounded investment strategy.
Trust deed investing is an investment tool that can help many people reach their monetary goals for invest in deeds of trust, it is important to understand the basic types of mortgages available and why trust deed investing is a win/win situation for all parties involved.
retirement. It is a useful addition to your retirement investing strategy because it is relatively low risk and low maintenance with a high rate of return. Before deciding to
The first type of mortgage is what is known as a true mortgage. In this type of real estate transaction, the borrower purchases a property with funds that are supplied by a bank or other lending institution. The legal and equitable deeds to the property both belong to the borrower as the owner of the property. This can pose an obstacle to the lender should the borrower default on his/her loan. Since the borrower holds the deed to the property if he/she defaults the lender must go through what is known as the process of judicial foreclosure. This involves the lender obtaining a court order before the home can be sold without the borrower’s consent. This can be a lengthy and expensive process for the lender.
The second type of “mortgage” situation involves a deed of trust. In this lending situation, there are three parties involved, the lender, the borrower, and a third party known as the trustee. The trustee purchases a deed of trust from the lender which gives him/her the right to hold the legal deed to the property on behalf of the lender. Deeds of trust can be purchased for anywhere from $1,000,000 and up. Once the trustee buys the deed, he/she is said to be investing in deeds of trust. Like any investment, the trustee earns interest from the lender.
The interest rates earned on deed of trust investments
are typically higher than other types of investments.
Some investors earn as much as a 12% rate of return on their investment. As long as the borrower continues to pay his/her loan to the lender, the trustee earns money for the term of the investment with no further work.
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