Investing in first trust deeds is an excellent way for you to make money on real estate without necessarily having to actually go through the process of rehabbing, managing and/or renting properties. You can take advantage of the fact that investors doing real estate deals need to borrow money while you earn a healthy return by providing them with those funds.

When you invest in first trust deeds you make money on real estate by becoming the lender. Like any other lender, you earn a healthy return by charging anywhere from 10-12% for the loan. Unlike many bank lenders, though, you entice borrowers by offering fast execution. This is good for you, too, because it means that you get your money working for you very quickly. At the same time, you will also require that borrowers put down a sizable down payment in the neighborhood of 40 percent of the price of the property. This makes them more likely to pay you back while also ensuring that, if they do not pay you back, there is enough equity left in the property for you to resell it and get your money back.

First trust deeds offer an excellent return compared to other investments. Many REITs, which are a way to make money on real estate through the stock market, offer yields well below five percent. Conservative private real estate investment funds typically offer returns of less than seven percent. If you were to put your money in the bank, you would be lucky to earn more than one or two percent on a one- or two-year Certificate of Deposit, and you would make even less on one- or three-year treasuries which are currently yielding less than one-half of one percent per year.

First trust deeds, on the other hand, offer healthy returns that frequently run into double digits, even though they are very safe due to their low level of leverage. In other words, you can expect to earn in the neighborhood of 10 percent per year by lending money to investors who get their hands dirty rehabilitating properties. Some trust deed investments pay more than 10 percent, while others will pay less. In either case, they represent one of the best ways to make money on real estate in today's market.