Trust deed investing

Trust deed investing is typically much different than other types of lending. It’s up to the individual lender to determine whether to lend out the money or deny the application. This means they may not deny it based solely on whether they think an investor is going to be able to repay it. They may look at the property in question and determine it isn’t worth the risk of investing. In the same way, this means individuals who are interested in renovating property to sell it for a higher cost have a better chance of getting the funds they need to complete the project, saving them from the hassle of qualifying for a bank loan.

 You’ll need to fill out an investment application for consideration just like you would with any other mortgage-type loan. Despite the fact that trust deed investments do not have the same exact expectations as a traditional bank loan, you still need to give several pieces of basic information. This includes your contact information, investment objectives and investment background among other things. You’ll also need to give specifics on properties you are considering including the types and sizes and how much money you are expecting to obtain from this of financing. When your request is approved, your lender will ask you to give additional information about the details of the specific property or properties you are interested in. 

Before you make the decision to move forward with this type of investment, it’s important to understand exactly what a trust deed loan will look like. When you obtain financing through a private individual, you can expect to pay interest rates of at least nine percent, which is higher than your typical bank-funded mortgage. Terms for these loans are often much shorter, ranging from as few as three months up to three years. You can expect to borrow between 60 and 65 percent of the loan to value ratio, with amounts ranging between $50,000 and $2,000,000, depending on the value of the property you are considering. All of these loans are underwritten and will come with many of the same legal obligations as a mortgage would.