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Risks of Trust Deed Investing
An interest rate of 9% or higher and stable monthly payments sounds too good to be true to some investors. While there are many, many benefits to investing in trust deeds, like any investment, there are also some risks.The biggest risk is that the borrower will default on the loan. If this happens the trustee will no longer earn interest payments. The trustee also has to foreclose on the home and sell it, which can be a hassle. Finally, if the home is sold for a loss, the trustee will lose his/her initial investment. The easiest way to help mitigate the foreclosure risk is to ensure that you are investing in deeds of trust for properties that are worth their loan amounts. Basically, don’t buy a trust deed on a property that you would not want to own yourself (although you it doesn’t necessarily have to be somewhere you would want to live). Also, make sure that you connect with a trustworthy appraiser to give you a solid idea of the value of the property before moving forward with the investment.
Another downfall of trust deed investing is that your investment is not liquid. If you purchase stocks, for example, you can ... more

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