A Practical Guide to Trust Deed Investing in 2023

What is Trust Deed Investing?

Trust deed investing is a type of real estate investment that involves lending money to a borrower who is using the property as collateral. The loan is typically secured by a mortgage or deed of trust, and the investor is paid interest on the loan over the life of the investment. Trust deed investing can be a great way to earn a stable return on your investment, and it can also offer the potential for high returns if the property is sold or refinanced at a profit.

Why Invest in Trust Deeds?

There are many reasons why trust deed investing can be a great option for those looking to invest their money. One of the main advantages of this type of investment is that it offers a relatively low level of risk. Since the loan is secured by the property, the investor's downside is limited to the amount of their investment. Additionally, trust deed investing can provide a higher return than other types of investments, such as bonds or CDs. And finally, trust deed investing can be a great way to diversify your investment portfolio.

How to Get Started in Trust Deed Investing?

If you're interested in trust deed investing, there are a few things you need to know before getting started. First, you'll need to find a reputable lender who specializes in this type of investment. There are many online lenders that offer trust deed investments, so it's important to compare rates and terms before selecting one. Once you've found a lender, you'll need to complete an application and provide some basic information about your financial situation. Be sure to read all of the fine print before signing any paperwork!

Once you've been approved for a loan, you'll need to decide how much money you want to invest. It's important to remember that the more money you invest, the higher the return will be. However, you'll also be taking on more risk. As such, it's important to strike a balance between risk and return that is comfortable for you.

Once you've decided how much money to invest, the next step is to find a property to that you're interested in lending money to. There are many ways to find properties that are suitable for trust deed investing. You can search online listings, contact a real estate agent, or even drive around your neighborhood to look for properties that might be in need of financing.

Once you've found a property that you're interested in, the next step is to negotiate the terms of the loan with the borrower. This includes things like the interest rate, length of the loan, and any other special conditions that might be attached to the loan. It's important to get all of the terms in writing before proceeding with the loan.

After the loan has been finalized, you'll need to make sure that payments are made on time and in full. If the borrower defaults on the loan, you could be at risk of losing your investment. As such, it's important to monitor the loan carefully and take action if payments are not being made as agreed.

What is Hard Money Lending?

Hard money lending is a type of short-term loan that is typically used to finance the purchase or rehabilitation of a property. Hard money loans are typically made by private lenders, and they are usually secured by the property itself. Hard money loans are typically much higher than traditional loans, but they can also be easier to qualify for.

What are the Benefits of Hard Money Lending?

There are many benefits to hard money lending. One of the main advantages is that it can provide you with the capital you need to purchase or rehab a property quickly. Additionally, hard money loans can be approved in as little as 24 hours, which means you won't have to wait weeks or months for traditional financing. And finally, hard money loans can be used for a variety of purposes, such as investment properties, commercial real estate, or even personal loans.

What are the Risks of Hard Money Lending?

Of course, there are also some risks associated with hard money lending. One of the main risks is that you could lose your property if you default on the loan. Additionally, hard money loans typically have higher interest rates than traditional loans, so you'll need to be prepared to make higher monthly payments. And finally, hard money lenders may require that you have some experience in real estate before they'll lend you money.

How is Trust Deed Investing Regulated?

Trust deed investing is regulated by the Secured Transactions Act. The act requires that all lenders must be licensed by the Department of Business Oversight in order to lend money for trust deed investments. Additionally, the act requires that all loans be secured by a deed of trust, which is a legal document that gives the lender a security interest in the property.

What are the Yields on Trust Deed Investments?

Trust deed investments typically offer higher yields than other types of investments, such as stocks or bonds. This is because trust deed investors are taking on more risk than other investors. As such, they usually require a higher return in order to compensate for this risk. Trust deed investment yields can vary depending on the property, the terms of the loan, and the market conditions at the time of the loan. However, trust deed investors can typically expect to earn between 8% and 12% on their investment.

That’s it! You now have a working knowledge of what trust deed investing is, how to get started, the benefits and risks involved, as well as how it is regulated. If you are interested in getting into this market or would like more information on yields and current opportunities, don’t hesitate to give Persevere Lending a call. They would be more than happy to chat with you about the exciting world of trust deed investments!