Now we all know what stocks are, but what exactly are trust deeds? They sound like an inscrutable legal document, typed up in the dusky backroom of some lawyers office. But really, trust deeds are quite simple.
Think of trust deeds as mortgages, where you as an investor act as the bank. A trust deed is a loan that you give to a real-estate developer, and in exchange for your investment, the developer pays you back both interest and principal.
You might think it’s wise to invest in the stock market but think again. The value of a stock is founded on speculation and hot air. A single vague news story can send a stock price plummeting.
In contrast, trust deeds are secured by real-estate. Real-estate has an inherent value, and that value rarely declines.
Here are just a few more reasons why you should think twice before you invest in stocks.
• No guaranteed yield- The dividend a stock pays can change, or eliminated whenever a company chooses. Also, remember the dividends paid by stocks are usually paltry and rarely stray into the double digits.
• No guaranteed return on your initial investment- Whatever money you put into stocks, you have no assurance that you’re going to get your money back. If you buy 100 K in Tesla stock, the value of that stock could plummet to five bucks in the blink of an eye.
• No right to recourse- You can’t foreclose on a company if the price of its stock falls. You won’t be able to force Elon Musk to liquidate his art collection so you can get back the 99,995 dollars you lost by investing in him.
• Guaranteed yield- Unlike a board of directors, a trust deed borrower can’t just decide to stop making interest payments. In addition, you might earn a monthly return of 10 percent or more from a trust deed, which is far more than most stocks can offer you.
• Guaranteed return on your initial investment- Remember trust deeds are loans. Once a borrower signs onto a trust deed they’re obligated to pay you back, in full. Can any stock promise you that?
• Right to recourse- A borrower might be under contract to pay you back, and keep up with interest payments, but what if they don’t? Well, the answer is simple; you foreclose and liquidate the borrower’s property allowing you to recoup most of your initial investment. If you lose money on a stock market, your loss complete and irreversible.
In short, trust deeds offer guarantees, guaranteed interest payments, guaranteed repayment of your initial investment and guaranteed protections.
Stocks are speculation; trust deeds are investments. So don’t waste money speculating on the stock market, instead invest in trust deeds.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.