Trust deed investing can be an excellent way to invest capital that you are willing to put at risk. It offers excellent returns with a high degree of security. This style of investing lets you participate in the appreciating real estate market without having to actively acquire, own and manage properties. Getting started is easier than you think, too.

1. Determine how much capital you are willing to invest. You can get started trust deed investing with as little as $50,000 or with millions of dollars.
2. Find a reputable hard money lender with whom to invest. Most trust deed investors’ work through third party hard money lenders that find borrowers and package their applications. The hard money lender does all of the leg work of finding the borrower and packaging their application, letting you focus on investing your money.
3. Once you find a property profile that works for you, ask the hard money lender for a due diligence package.  Typically, you want to look for a strong borrower that has significant funds for both a down payment and for reserves. You should also consider looking at the borrower's ability to repay your loan and overall credit standing.
4. Review the property appraisal. Once you know the property's value, you can target loans where the borrower is putting at least 20-30 percent down of the negotiated purchase price. Given that properties are still trading below their historical highs, getting 20-30 percent down on a reduced purchase price leaves a great deal of equity, increasing the likelihood that the loan will get paid off. 
5. Close the loan. Once you review and accept the application package, the purchase transaction can close. You will deliver the funds to escrow where your funds are secured until all monies are collected and the loan is funded. The 1^st trust deed is recorded by the county in your name and the original is mailed back to you.
6. Cash your checks. Every month, the buyer will make a payment to the third party servicer. Most payments contain a mix of a double-digit interest rate and principal which are entered and deposited into your account by the third party loan servicer. This is the best part of trust deed investing -- you receive high returns every month while you hold the 1^st trust deed to the property.
7. Reinvest your capital. Most private money mortgages are relatively short term. Once the buyer stabilizes the property, they either refinance it with a lower-rate traditional loan or sell it to a buyer that takes out a traditional homeowner's mortgage. You then receive your money back to recycle in another round of trust deed investing.

Trust deed investing offers excellent returns with little active effort on your part. If you are interested in learning more about trust deed investing, contact us about how to get started.