Trust Deed Investing - Get Started with Saint Investment Group

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What is trust deed investing?

Trust deed investing has been around for a long time, and is an investment option for properties located in California and 19 other states. At the most essential level, trust deed investing is buying loans backed by real estate, much the way banks invest in mortgages. This type of investment can either be for short or long-term loans, depending on the strategy of the investor or the trust deed investment fund manager.

Sometimes homeowners fall behind on their mortgage and risk foreclosure, but could still handle their payments if they were adjusted to meet their budget. In this case, investors like Saint Investment Group can reach out to the homeowner or commercial property owner to work out a payment arrangement that they can afford, and purchase their loan through a trust deed. This helps these highly motivated property owners get back on their feet so they can continue on with diligent on-time payments.

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How does trust deed investing work?

If an everyday investor wants to invest in trust deeds, there are limited options available to get into the market. One option is to directly originate individual loans to homebuyers. Another is to purchase loans from brokers who originated the loans. Often the most stable and consistent returns can be found by investing in a trust deed fund.

Attempting to purchase trust deeds for individual properties isn’t nearly as secure as a trust deed fund. Individual trust deeds come with a significantly higher risk of a complete loss of investment capital. For the average investor, individual trust deeds have a high degree of due diligence and knowledge of area real estate markets needed to effectively limit risk. With the ever-changing legal landscape (Federal, State, County, AND City can all have overlapping laws), newer investors can quickly find themselves in over their heads. Investing with seasoned operators, who often invest in thousands of opportunities yearly, allows an investor to have the best of both worlds: stability and high-income returns.

Saint Investment Group has the real estate expertise to source optimal properties and limit risk by holding a variety of property types, ensuring stable, consistent monthly passive income.

How are individual trust deeds and trust deed funds different?

Investing in individual trust deeds requires deeper knowledge of the real estate market, compliance, laws, collections, and investing in loans. There’s considerably more work involved, and deals must be consistently sourced as loans are paid off. This requires a vast network in the financial industry to have access to high-quality loans, as well as the capital available to make extremely large purchases to get better pricing. Also, far more detailed knowledge of local markets is necessary for this type of trust deed investing, which is why many investors choose to instead invest in trust deed investment funds like Saint Investment Group.

The biggest downside to individual trust deed investing is that each borrower must be evaluated one by one, terms set specific to the property and borrower, along with significant due diligence on the market the property is in. In the US, there are hundreds of markets, and thousands of submarkets, each with pros and cons. There are also laws and regulations that differ from city to city to keep track of. This adds more risk and time to the investment process, making this option much less attractive for those seeking more passive sources of income. Note investing has big opportunities, but it is often extremely difficult for the newer investor.

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Buying into a professionally managed fund of trust deeds with Saint Investment Group takes far less work for investors who aren’t well-versed in real estate markets and dealing with individual real estate investors. With a fund that’s carefully managed by experienced trust deed fund managers, a detailed analysis of each deal is handled so investors can play a more passive role. The investor benefits from consistent, secure returns paid to them each and every month, along with a far more diversified real estate investment portfolio than going it alone.

Advantages of Trust Deed Investing

One of the primary benefits of investing in trust deed investment funds is that the investment is secured by tangible assets that have real value, unlike stock and equity investments that can evaporate almost overnight.

If the loan backed by the property isn’t paid, the property can be taken title of and sold to recoup the investment. Typically, often only a maximum of 70% of the value of the property is loaned on, so there’s a strong chance the property could be sold at a profit rather than a loss. This gives the borrower incentive to continue paying on the loan and gives the trust deed fund manager more reassurance when servicing loans on properties.

Another benefit of trust deed fund investing is that in the event of loan default, foreclosure is significantly easier than with direct mortgage lending, only requiring a non-judicial process that bypasses court involvement. This is less costly and time-consuming than the legal foreclosure requirements regular mortgages have.

For example, in some non-judicial states, a typical foreclosure process gives the borrower 90 days to rectify the late payments, and then it only takes 21 days before the property can be sold if the borrower can’t get their loan current in time. This minimizes risks to lenders and trust deed fund investors and reduces foreclosures majorly hurting a local market.

Generate passive income with trust deed investing

Perhaps the main reason investors choose to invest in trust deeds is that there are appealing yields with relatively low risk. The returns on trust deed investments are paid back to the investor at a fixed monthly amount and interest rate until the loan is fully paid off, and some investors choose to reallocate their payments back into the fund for increased earnings. Consistent, predictable passive income is one of the key benefits of trust deed fund investing.

Risks to trust deed investing

While there are plenty of upsides to trust deed investing, there are some potential risks to be aware of as well. The most important thing to remember about trust deed investments is they aren’t as liquid as stock and equity investments are. It typically takes owning many notes to balance out the risk of any single loan. That’s why a trust deed fund is so much more appealing for investors.

When you’re ready to get started in trust deed fund investing, Saint Investment Group is a trust deed investment company with strong returns backed by an advanced portfolio of underlying assets. Give our team a call today to learn more about generating consistent, high return, passive income on your hard-earned capital.