Trust deed investments should be an important part of any investor’s portfolio. Whether a corporation, pension plan or private individual, trust deeds offer a unique combination of superior returns, outstanding security and investor convenience.
All knowledgeable investors are aware of the incredibly low rates being offered by financial institutions on Certificates of Deposit and money market funds. Even investors with substantial assets can only do marginally better and must diversify or risk losing value to inflation. The abysmal state of the stock market is no more appealing.
For the investor who demands more, Investing in 1st Trust Deeds deliver interest rates between 8 and 11 percent. These rates are fixed and thus are guaranteed for the duration of the loan. Payments are made monthly and the investor receives an itemized statement for each of his loans.
As a prudent investor, you should always associate higher returns with higher risk. Investing in 1st Trust Deeds, as with all others, are no different. They do come with the possibility of default. However, this risk is significantly mitigated by two factors. First, each loan is secured by a promissory note payable to you on a single investment property. Secondly, the borrowers are often real estate investor veterans who typically have high FICO scores and have a proven track record of success and reliability.
Nevertheless, defaults do occur. In this event, you, the lender may obtain sole possession of the property to do with as you will. This fact is significant because usually 1st Trust Deeds are written at significantly discounted loan to value ratio, typically 60 percent or less. Investors should feel comfortable with the fact that, in the event of default, they are receiving title to a property greater than the loan amount and will be able to recoup their investment.
In addition, to protect the investor, all procedures normally undertaken by banks to ensure the security of their loans are also required when Trust Deed Investments are executed. Appraisals and title searches are performed. Hazard insurance to protect the property is a requirement and all transfers of monies are handled by a licensed and bonded escrow company.
Of course, an investor can perform any and all activities necessary to generate a real estate loan himself. For the uninitiated, it is an arduous and stress producing process. Private Money Lenders that sell their 1st Trust Deed Notes add one more dimension to these investment vehicles, convenience.
They have the knowledge and expertise to oversee and expedite the process. Simply put, they relieve the investor of the paperwork headache. Indeed, all aspects of the loan process from origination to servicing can be handled or outsourced by the participating financial institution. In addition, these Private Money Lenders will continue to monitor the loans and provide expert advice throughout the life of the loan.
The Final Analysis
Independent information is freely available about 1st Trust Deeds on the Internet. In addition, there are many reputable, financial advisors and other real estate experts who can explain the intricacies of these financially rewarding investments.