Our Beginner's Guide to Trust Deed Investing

What is Trust Deed Investing

Trust deed investing is a real estate investment in which an investor funds a borrower to purchase the property. The investor then becomes the lien holder on the property, meaning they have a legal claim to the property if the borrower defaults on their loan. Trust deed investing can be a great way to earn high returns while minimizing risk.

Like banks dealing in mortgages, it entails purchasing commercial or residential debts backed by real estate. Depending on the investor's or fund manager's plan, the loans may be either short- or long-term.

You can directly make individual loans to homeowners or buy loans from brokers who made the loans if you want to enter into the trust deed investment business.

Depending on your investment objectives, there may be different trust deed investment opportunities. Houses might range from land to rental properties to flips, therefore all mortgage notes are unique and have varying amounts of risk.

How Does Trust Deed Investing Work?

When you invest in a trust deed, you are essentially loaning money to a borrower who is using the loan to purchase a property. As the lender, you will be first in line to receive a payment if the borrower defaults on their loan. This makes trust deed investing a relatively low-risk investment, as you are protected by the collateral of the property.

Trust deed investing can be a great way to earn high returns while minimizing risk.

Why Invest in Trust Deeds?

Trust deed investing can be a great way to earn high returns while minimizing risk. If you are looking for an investment with the potential for high returns and low risk, trust deed investing may be the right choice for you!

Advantages of Trust Deed Investing

There are many advantages to trust deed investing. Trust deed investments offer the potential for high returns, while also being a relatively low-risk investment. Trust deed investing can also be a good way to diversify your investment portfolio, as real estate is not as volatile as stocks and other investments.

Disadvantages of Trust Deed Investing

There are a few disadvantages to trust deed investing. One disadvantage is that trust deed investments are not liquid, meaning you cannot easily sell them if you need the money. Another disadvantage is that trust deed investing can be complicated, so it is important to do your research and understand the process before getting started.

Learn Everything You Need To Know About Trust Deed Investing In This Quick Guide.

After learning the fundamentals of trust deed investments, start your first investment by following these steps:

• Find a Mortgage Note Broker

The first step is to find a mortgage note broker. A mortgage note broker is a professional who connects investors with borrowers looking for loans. Mortgage note brokers can help you find good investment opportunities and guide you through the loan process.

• Evaluation & Underwriting

Once you have found a potential borrower, it is important to evaluate the loan request and underwrite the risk. This means that you will need to look at the property, the borrower’s credit history, and the loan terms to determine if the investment is right for you.

• Purchase & Earn From Your Investment

If you decide to proceed with the loan, you will then need to purchase the trust deed and begin earning from your investment. Trust deed investing can be a great way to earn high returns while minimizing risk.

So, what is a trust deed? A trust deed investment is an agreement between a lender and a borrower in which the borrower pledges real property as collateral for a loan. The title to the property remains in the name of the borrower, but the legal authority to sell or transfer it transfers to the lender until the loan has been repaid in full. 

This quick guide should have answered all your questions about how trust deeds work. If you're ready to get started, give Persevere Lending a call – their mortgage note brokers are here to help make your investment dreams come true.