What are the risks with Trust deed investing?
There is no such thing as a sure thing, and that is especially true with Trust deed investing. One such risk is that this is not a liquid investment. You will not be able to cash it in quickly for ready capitol like you may with some government bonds or shares. The money is tied up in someone else and you will have to wait until the loan is paid back. So until the borrower pays off the loan, or if there is a foreclosure, until the property is sold.
There are also a lot of risks on the legal side. With so much important paperwork, there is
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sometimes a risk that there may be an error in the documentation or in the due diligence side of the Trust deed investing papers. This may lead to litigation or title disputes that will have to be settled in court. These legal problems may escalate, making it very expensive in the long run, but you will have to do what you can to protect your investment. It is incredibly important that you have people working with you that you can trust. It also helps to go over the paperwork many times to make sure every detail is correct before you finalize.
The biggest risk, of course, in providing a loan, is that borrower will default. It will then be up to the investor to handle the property. You will have to oversee the sell, and hoe that the market is good enough to sell quick and fast so that you can make a profit.
How can I make good decisions regarding trust deed investing? Is it worth it for me to do this type of investment?
While there are a lot of risks that you need to be aware of in trust deed investing, there is also a potential for a good return on your investment. It is wise to proceed with caution, but the chance for a profit is alluring!
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