Anyone who invests in trust deeds becomes a lender. It simply means that you are making money the same way commercial banks do. Investors take your money and give you a certain percentage on your deposits. They later lend it out at between 6% and 10% ROI, giving them a handsome profit even after covering the operating cost. Of course, there is collateral placed on these loans in form of a promissory note secured by a Deed of Trust.
Investing in underwritten first deeds always make a lot of sense. The current market conditions have made this investment option even more attractive. The restricted lending by most banks has created a greater access to high quality borrowers. Most importantly, the interest rates offered by real estate investment are far better than what commercial banks offer.
The Services Offered
Trust Deed lenders find and meet with the borrowers, underwrite, originate, fund, and set-up the servicing of the loan. In addition, they also closely monitor the performance of the loans and provide professional guidance to investors throughout the process.
To ensure that the titleholder has a full and valid title to the property, each loan provided is covered by ALTA lenders title policy. This also ensures that the title owner is the first lien position and enjoys protection against title defects.
As a requirement, borrowers must maintain homeowners insurance in order to cover the loan as well as the replacement improvements cost. As the lender, you are always listed as the loss payee.
As a rule, an independent appraisal company appraises all loans. Also, it is the responsibility of the lender to do sight inspection on every property not only to assess the property, but the community and neighborhood as well. This is done to evaluate how marketable the property will be in the future.
To ensure transparency, all loan payments are made directly to an insured, nationally recognized, and licensed company that services loans. You can choose to have your payments automatically deposited into your account after which you receive monthly statement.
Trust deed investing offers investors an opportunity to invest in unique real estate investments. It is one of the most profitable investment vehicles anyone can embark on.