How to Diversify Your Investment Portfolio with Trust Deeds

If you’re looking for ways to diversify your investment portfolio, consider funding trust deeds.

A trust deed investment is a promissory note that is secured by the deed of trust that will be paid to the investors. You will agree on the repayment amount, interest rate, and time frame for which it is to be paid.

This allows you to still be a part of the real estate market without acquiring, fixing up, and actually selling the real estate. Take a look at how trust deeds work and why you may want to add them to your portfolio.

What Is a Trust Deed Investment?

While a promissory note is an agreement to repay the loan, the trust deed pledges the property as the loan security. A private money mortgage broker can help lessen your risk and find investments that specifically match your investment style and risk tolerance.

You can work with your bank for trust deed investments, which will entitle you to interest payments that occur over the course of a mortgage loan. Once the mortgage term is over or the property is sold, the original investment will then be returned. Because the investment is secured by an actual property if the buyer is unable to make payments the person who holds the trust deed can foreclose and sell.

Why Consider Trust Deeds for Your Investments?

While the stock market can be unpredictable, private real estate investing can be a more stable option. Investing in real estate helps to diversify your portfolio by including choices other than stocks and bonds.

Trust deeds also provide collateralization. Here, the appraised real estate secures the investment, allowing you, the investor, to take possession of the property should a default occur. You can then sell in an effort to recoup the investment.

Trust deed loans are also short-term, allowing you to earn passive income without tying up money for many years to come.

You can customize your own investment portfolio by tailoring your investments to your own personal priorities and budget. That’s why it can really pay off in the future to look beyond conventional options so you can find the best way to utilize available capital.

By choosing specific properties to fund, you can receive strong returns with low risk. This will help grow your investment portfolio while providing better than average revenues.

Benefits of Trust Deeds

Trust deeds provide several important benefits. They can offer better returns than other options such as mutual funds, stocks, and bonds. When investing in trust deeds, you’ll receive:

  • Higher returns than other investments
  • A secured investment with a tangible asset
  • A passive option that generates income on a monthly basis
  • Relatively short investment terms

Funding a Trust Deed vs. Joining an Investment Fund

Depending on the amount of capital you want to invest and your investment style you may choose to fund a trust deed as a sole investor or join a trust deed investment fund. If you’re adding to a trust deed investment fund, you’ll put your own money into it while relying on the fund manager to follow the investment preferences set forth by the investor. If you fund a trust deed as a sole investor, you’ll reap all of the rewards but you’ll also be exposed to all of the risks.

The Role of the Mortgage Broker

The private money mortgage broker is responsible for administering all transactions between investor and borrower.

Investing in real estate requires open communication between you and the lender. If you want to diversify your investment portfolio, it’s important to find a broker who is licensed, reputable, and experienced.

Finding a broker with experience will help to create an important investing partnership through mutual trust and communication. The right broker can find deals that match your investing preferences and help you find another deal to keep your money invested after your current investment is completed.