Many experts
believe that investing in trust deeds
is one of the best investments out there. You will need to have a thorough
understanding of how it all works, but if you learn all you can you can
certainly turn a profit with the right property and good research. If you take
the time to learn the correct jargon and a good knowledge of the how it works
you can make the right decisions regarding our investment and make some money.
To begin
with, you will need to know what a deed of trust is. A trust deed is a real
estate transaction that that is used instead of a mortgage in some states. Investing in trust deeds is a
transaction that is made up of three different parties. There is a lender, a
borrower, ad a trustee. The lender will lend the money to the borrower and the
borrower will give the lender a promissory note, or a signed document that
contains all the crucial information that is necessary for the transaction.
This will include how much they are borrowing, what the payment plan will look
like, the amount of interest that will be charged, etc. They also need to transfer
property deeds to a third party trustee. In case of a non-payment and the loan
defaults, the trustee will then take over the property.
In most cases
the trustee will be a title company. Often, there will be a transfer of the
legal title to the trustee. Sometimes the title company will only have lien on
the property. Whatever one that will be used is dependent on the state that you
live in. There will be a power of sale clause in the signed documents. This
means that the trustee and sell the property without having to get a court
order. By having the deed of trust, those who are investing in trust deeds can insure that they will get a return on
their investment.
Who looks for loaning from people interested in investing in trust deeds?
Most experts
think that investing in trust deeds
is a great choice, and with the current market now it an especially good time
to do so. Because the market is struggling, it is hard for most people to get
loans, even if they are reasonably good candidates. The banks just are not
giving out many loans. Because of the limited amount of loans available from
the banks, there are more people looking for lenders from someone else to loan
to them. So, you are able to loan to people who are willing to pay a little
higher interest rates. They are also not as much a risk because of the limited
amounts of loans.
Many of the
people looking for loans from those investing
in trust deeds instead of banks are “flippers.” These are people that
purchase properties, usually at foreclosure prices, and then decide to fix them
up with the intent to resell them as quickly as possible. These flippers need
to buy low and sell high, and they need to do all of this as fast as possible. Most
borrowers will hope to pay back the loan within a very short time, from six
months to a few years. The faster they sell the more they make.
It is because
the banks do not want to lend to these business people that they are looking
for other options. Most banks do not want to take the risk of lending money to
buy a home that is already foreclosed, because they do not have the ability to
protect themselves. Those who are investing
in trust deeds will have the deed to the property so they will have to take
over the property if there is a default on the loan. It is important that the
lender is willing to take responsibility of the house if that happens.
Another
advantage in going to trust deed investors is the speed they get their money.
Moving quick is key in making a profit, and most loans can be processed in a
matter of days rather than 45-90 days that it will take a bank.
What do I need to do to begin investing in deeds of trust?
Find out as
much as you can about the people and properties you may be working with. In trust
deed investing you will usually go through a trustee. They will have different
available properties with details on each one. Read all the necessary forms,
then sign and return them. If you need advice, be sure to ask for help in
understanding what you are getting into. Request a due diligence package containing
an appraisal so that you can inspect your trust deed investment. Then you will need
to sign the right forms and send wire funds to escrow. The borrower will then
begin to pay the amount that was put into the promissory notes and you will
being to make a return on your investment.
Setabay Loans
23335 N 18th Drive Site
120
Phoenix AZ 85027
www.SetabayLoan.comwww.setabayloan.com