Lending has ground to a halt – anyone who has followed the financial sector over the last decade can attest to that fact. However, there are still property investors that continue to acquire assets. What is surprising is that many don’t realize that these property investors are not using their own capital. Instead, they are relying on investment property loans to help fill in the void left by a skeptical banking industry. If you have capital and are searching high and low for a way to find a return that goes beyond the 0.25% that banks are offering these days, consider investing in trust deeds. These arrangements are some of the best short term investments currently available to those with capital, and those in the know are seeing returns that exponentially surpass any other secure investment type.
Evaluating Security
Investment property loans provide an incredible amount of security on the part of the capital investor, as they are backed by the deed to the property itself. And, because the borrower only receives 60-65% of the property’s value in the loan (and they expect this rate), a default still results in a massive return on the investment once the property is sold! In a down economy, it provides on of the best short term investments possible.
The Banking Dynamic
This industry has grown quickly, as both sides of the lending equation are being satiated through the transaction. Banks are not lending, which means that they have no interest in offering up reasonable returns on CD investments, savings accounts, or other “secure” options. Potential borrowers are being turned away by the same banks, which leaves a gaping hole in the financial sector – a hole that is being filled by those with capital.
Investing in trust deed is a unique opportunity that is borne of the current economic landscape in the United States. While it may seem, to many, that real estate has slowed, in actuality, properties continue to change hands on a daily basis. The only difference that the economic status of the country has created was the manner in which these properties are changing hands. Banks are no longer involved, meaning that individuals are generating the incredible returns that the lending organizations have simply turned their backs on. Government regulations prevent them from making these types of loans, which opens the door to private investors, as these regulations only apply to commercial lending institutions.
Those with an interest in investment property loans should assess their own capital, find property investors that need to use it to acquire properties, and then set the expected rate of return. An appraisal team can go over the property’s true value with the investor, giving them all of the information necessary to make a sound decision regarding the loan. Information regarding the subject is easily found, and once you begin investing in trust deeds, expect a windfall of interested borrowers. It’s the best way to get a double-digit return on your money!
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