TRUST DEED INVESTING

 

At the simplest level, trust deed investing is when an individual lends money to a borrower through the services of a broker. The source of this money can be from savings, credit lines, or retirement accounts. The broker finds the borrower who wants the loan, and the private party with the money provides the funding.The three most important documents in a trust deed investment are the Deed of Trust, Title Policy and Promissory Note.  The Deed of Trust (signed and notarized by the borrower) is recorded in the county in which the real estate is located, putting the public on notice that the investors in the Trust Deed have a recorded interest in the property which must be paid off before ANYTHING may be done with the property.  The Title Policy is an insurance policy issued by a large title company guaranteeing the investors in the Trust Deed that their interest is valid and properly recorded.  The Promissory Note is the borrower’s promise to repay the loan and agreeing that if there is a default, the investors will foreclose on the real estate securing the loan.