Portfolio Diversification with First Trust Deeds

Trust Deed Investments

Trust deed investments should be an important part of your portfolio. Whether a corporation, pension plan or private individual, trust deeds offer a unique combination of superior returns, outstanding security and investor convenience.

 

Trust Deeds Bring Higher Returns 

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 constantly changing stock market can be even less appealing.
For the investor who desires higher fixed income returns, investing in First Trust Deeds can deliver interest rates between 8 and 12 percent. These rates are fixed and can be anticipated for the duration of the loan.  Payments are made monthly and the investor receives an itemized statement for each of his loans.

 

Trust Deeds Offer Security

As a prudent investor, you should always associate higher returns with higher risk. Investing in First Trust Deeds, as with other investment vehicles, is 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 veterans who typically have high credit scores with a proven track record of success and reliability.

Nevertheless, defaults do occur. In this event you, as lender, may obtain sole possession of the property and either keep it for a rental or sell it. This fact is significant because usually First Trust Deeds are written at significantly discounted loan to value ratio, typically 60 percent or less.  Investors should feel comfortable that in the event of default and foreclosure they will receive title to a property potentially with a value greater than the loan amount.

As protection to the lender all procedures undertaken by banks to ensure the security of their loans are also required when Private Trust Deed Investments are executed.  Appraisals and title searches are performed.  Hazard insurance is a requirement, and all transfers of monies are handled by a licensed and bonded escrow company.

 

Trust Deeds Offer Convenience

An investor may choose to perform and all activities necessary to generate a real estate loan himself.  For the uninitiated, this can be a difficult.  Private Money Brokers that negotiate and administer their Trust Deed Notes add one more dimension to these investment vehicles, convenience.

Private Money Brokers have the knowledge and expertise to oversee and expedite the process and to keep all aspects of the loan in compliance with regulators. They relieve the investor of the paperwork headache.  All components of the loan process, from origination to servicing, can be handled or outsourced by the Broker.  Private Money Brokers will continue to monitor the loans and provide expert advice throughout the life of the loan.

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