First trust deed investing is one of the most secure and lucrative ways to earn superior returns on your invested capital. They have been used for decades by the wealthy and the successful to obtain outsized returns with a maximum of security in every type of economic climate.
Investors of every stripe are constantly seeking greater returns on their investments. All have heard and been entranced by the dramatic stories of fortunes being made with futures contracts, IPOs, junk bonds or some other esoteric derivative or financial vehicle.
Unfortunately, there is almost always a significant downside to these investments with their superior returns, namely a greatly increased risk to the investor’s capital. In short, the actual problem for any investor is obtaining a decent return without unduly jeopardizing his capital.
Trust deed investing is a particularly safe alternative to unsecured and uninsured investments. In fact, first trust deeds are backed by a real estate asset and the transaction is governed by all the same requirements and laws as a traditional, bank financed loan. The only difference is that a private individual or company makes the loan instead of a bank or other financial institution.
First trust deeds are the investment of choice for many accredited investors across the United States. They come in a variety of options and some can be customized to suit your specific investment goals and financial needs.
Many real estate backed deals are not acceptable to traditional banks and other lending institutions for a variety of reasons. While some of these reasons involve government regulations, many are of the CYA variety. In short, if an unusual loan defaults, someone will lose their job as the scapegoat. As a result, many of these loans do not get made.
Someone interested in trust deed investing, on the other hand, can make an informed decision about an unusual deal and decide whether it makes financial sense for them to make the loan. In return, they are able to charge an above market interest rate, typically in the nine to thirteen per cent range
Trust deed investing, as its name implies, is all about security. Loans on made against the first deed of a property. This means that the investor has the right to foreclose and take ownership of the property if the borrower fails to make timely payments.
Another significant aspect of these loans is that they are made at a deep discount to the actual value of the property. Thus, if the property does require foreclosure, the investor can have a “fire” sale and still make a reasonable return on his investment.
Lastly, first trust deed loans are made with all the same conditions that a traditional bank requires. That is, title searches and inspections are performed, insurance is required and an escrow account for taxes is established. The investor is secured against ever conceivable problem that might occur.
Trust deed investing is not something that the individual investor will normally undertake on his own. Experienced and reputable firms exist that bring lenders and borrowers together. In addition, these companies with their teams of highly qualified individuals also examine the deals for suitability and legitimacy.
Trust deed providers can also assist at every level of the deal. They have the resources to provide inspectors, appraisers and loan servicing companies. Trust deed investing can be a lucrative part of any savvy investors portfolio and the first step is simply understanding the process.
A Final Thought
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