Private individuals and companies will find it difficult to obtain superior returns without an unacceptable degree of risk in the traditional financial world. Traditional banks, stock brokerages and financial investment companies provide a “range” of investment vehicles but all rely on the same basic tenet that to obtain superior results, an investor must accept a greater degree of risk to his capital.
For superior returns with marginal risk, private individuals should turn to “hard money loans.” The loans, also known as trust deed investments, provide returns in the double digit range against the security of a real estate backed asset. These investment vehicles warrant consideration by the investor for six significant reasons.
Banks borrow money and then re-loan it at the prevailing market rate. Thus, to make money themselves, they must pay the substandard investment rates. Anyone with a CD or savings account knows this fact without being told. Quite simply, trust deed investments eliminate the middle man, the bank, and allow the investor to reap a greater rate of return on the money he invests.
Finding a worthwhile borrower and deal might seem like a daunting process. It would be without the use of a reputable third party private money lender. These companies bring investors and borrowers together. They protect both parties as they scrutinize both the lender and the borrower. In addition, they examine the deals for risk and security. For the investor, private money lenders are an excellent venue for identifying potential deals within their financial parameters and risk tolerance.
There is a “menu” of loans available. While most fit the traditional mold of monthly payments, many can be customized to fit the needs of an individual investor. From short term with balloon payments to long term guaranteed rates, trust deed investments perform like most traditional real estate loans.
Asset Backed Security
The benefit of making a loan on a “real” asset at a substantially discounted valuation makes these hard money loans an extremely attractive option. While there can be occasional defaults, the investor obtains a real estate property that can be sold and still provide a sizable gain. In addition, all insurance, title search and legal documents required in bank-sponsored loans are also required on these deals.
The same private money lending companies that bring investors and borrowers together for hard money loans can also provide access to a wide variety of investment services. You can be as involved as you like or can simply wait for your monthly payment.