Trust Deed Investing In Real Estate
Certainly, interest rates for savings accounts will remain relatively low for the foreseeable future
. CDs and bonds dont provide returns that appeal and the stock market promises to remain its usual unpredictable self. To many it seems that a good time to invest may not come along for quite a while. Moneys still tight and generally not flowing with any degree of velocity and there seems to be no visible change in sight.
However
A highly secure investment vehicle that does provide attractive yields is available and it exists within the real estate industry; namely trust deed investing.
Trust deed investing is defined simply as when a personal investor sources funds and underwrites loans directly to real estate investors. Made possible by the current economic climate and market, professional real estate investors utilize the funds to purchase properties from banks at under market value prices, renovate the properties and then either rent (buy and hold) or resell (flip) them for a profit. While trust deed investments can vary in length dependent on what the parties decide and agree to, theyre traditionally kept to being short term (five years or less) loans.
Trust deed investments offer attractive yields and low risks. Investors usually earn high single-digit (~8%) annual interest returns, paid each month. In many cases, returns easily exceeding 10% over the life of the investment are returned when all factors and bonuses are included. These returns are highly favorable relative to any other investment options with similar risk levels.
Trust Deed Investment Example Here
The main mitigation of risk for trust deed investments resides within the difference between the loan amount and the true market value of the securing property itself. A well structured trust deed investment should have a loan-to-market value of 65% or better (less). If a borrower does not perform, the lender can foreclose on the property quickly and easily, sell it to recover an amount which exceeds their investment and also any interest owed (usually). The investment is so unlikely to lose money that a trust deed investor may benefit in a greater way if the borrower defaults, often hoping for such an occurrence.
The reason that banks themselves are reluctant to lend in this market is because theyre still holding a great deal of bad real estate loans on their balance sheets which is a consequence of their poor home lending practices in past years. These conditions have enabled the trust deed investor to be able to command high interest rates and returns.
Trust deed investing can be accomplished in a virtually fully secured and risk free manner. The educated investor will equip him or herself with the proper knowledge, carefully review the investment by conducting a proper financial analysis and ultimately invest only with trustworthy experts.
Trust Deed Investment Example Here
Typical OCG Properties trust deed investment baseline criteria:
Investor receives an 8% interest rate for 1 5 years
25% of Equity for 4 year term (bonus)
50% of Equity for 5 year term (bonus)
A positive cash flow check every month!
Secured by the property at no more than 65% of the market value
The OCG Properties Mission Statement:
It is our mission to help clients attain financial freedom by providing sound real estate investment opportunities, to support and educate our clients and at the same time improving communities worldwide
by: MathewOwens
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