Diversify Your Retirement Portfolio By Investing in Trust Deeds
Investing in trust deeds offers investors a safe place to park their cash while earning above average returns. Since bank lending has been slowed or halted in certain sectors since 2008, many people have had to rely on private money lenders. Non-bank lenders, also called private money lenders, have stepped up to fill the voids left in lending after bank meltdowns dried up lending in many areas.
Because a lender gets a first trust deed on a piece of real estate in exchange for making a loan, these loans are called ‘trust deeds,’ thus the term, ‘trust deed investing.’ In simple terms, private money lenders are investing in trust deeds when making private money loans to borrowers.
Depending on which area of the Country you are in, interest rates charged by private money lenders vary greatly. In Western States, most trust deed investors can earn between 9% to 12% interest on their loans, depending on the property characteristics and various other risk factors. On the East Coast, trust deeds pay higher rates of return, sometimes as high as 15%.
Private money loans are typically made to sophisticated real estate investors and not to consumers and homeowners. Borrowers of private money loans are using these loans as tools to flip an investment property or acquire a distressed property that they will later refinance. Most of these borrowers are real estate experts who are taking advantage of an opportunity that a slow bank loan could never catch in time.
If you would like more information about private and hard money loans, take a look at our blog, ‘Hard Money 101’ at this link: http://privatemoneyutah.com/hard-money-101/