1st Trust Deeds
The Many Options for Trust Deed Investors
If you ask anyone involved in financial markets for some guidance with a reliable investment, they might be unable to give you a good answer. The crazy patterns that have developed in the world of global finance have made it relatively difficult for anyone to know where to safely place their money.
Interestingly enough trust deed investors know all about reliable returns and low-risk options. This is not a new market or financial vehicle, but its association with real estate makes many people hesitate to even consider it as a possibility for their portfolio. This is unfortunate because now more than ever it is able to deliver remarkable returns without an enormous amount of risk.
How do trust deed investors make their money? It is actually a very simple process that fundamentally turns the investor into a real estate lender. What happens is that formalized companies known as TDICs (trust deed investment companies) investigate real estate projects or programs that have approached them for a loan.
Generally, this is the sort of loan looked at as private money or hard money from the point of view of the borrower, but also falls under the trust deed option as well. The TDIC will perform a thorough analysis of the property or asset before recommending it to their investors, and is usually the way for a business to acquire the money it needs more rapidly than traditional borrowing.
Because the venture is somewhat risky, and because the lender is able to provide the money much faster, the rate of interest tends to be notably higher too. For instance, a traditional bank loan might provide the borrower with a five or six percent rate of interest. The trust deed option will usually require twelve percent or more, but it is generally available for transactions traditionally turned down by a bank and also has a very rapid-fire turnaround time.
Trust deed investors are then given title or deed to the property until the loan has been repaid in full. An investor must also understand the differences in how the arrangements are drafted if they want to be sure to get the best position and protection. For instance, there are fractional notes and also notes that belong entirely to a single investor. Fractional notes are usually owned by ten or less trust deed investors, and each investor might itself be a retirement fund, IRA group, or a single individual.
With the credit crisis holding steady and the subprime market eliminated, the existence of trust deeds makes it easier than ever for TDICs to identify highly profitable and qualified properties in which to direct their clients’ funds. Additionally, the conditions in the world-wide real estate market, in which real estate values are less likely to be over-inflated, makes the investments even more beneficial. This all means that trust deed investors can consider such opportunities to be reliable, low-risk, and high-profit ways to balance out a portfolio.
For more information about available trust deed opportunities please contact Sean Safholm @ 916.276.7400
