Beginner’s Guide to Real Estate Trust Deed Investing
Trust deed investing has become a popular option for those seeking solid, consistent returns outside of traditional stock markets. At RTI Bridge Loans, we regularly assist first-time investors in understanding how it works and what to expect. This guide is designed to provide a clear, professional overview of trust deed investing and how it can fit into your financial strategy.
At its core, trust deed investing involves lending money to individuals or businesses purchasing or refinancing real estate. The loan is secured by the property itself, offering a tangible asset as collateral.
There are three key roles in this arrangement:
- The borrower is the individual or entity receiving the loan.
- The lender (you) provides the capital.
- The trustee holds the legal title to the property until the loan is fully repaid.
This setup ensures that your investment is backed by real property rather than unsecured debt.
An Overview of Second Trust Deeds
You may come across the terms “first” and “second” trust deeds. A first trust deed is the primary loan on a property. A second trust deed is a subordinate loan, meaning it is repaid only after the first trust deed in the event of a default.
Second trust deed investing offers the potential for higher returns, which is why many experienced investors include them in their portfolios. While there is more risk involved, the reward can be significant, especially when working with a reliable hard money lender in California.
Key Benefits of Trust Deed Investing
Trust deed investing is favored for its predictable income and passive nature. Here are a few reasons why it stands out:
- Investments are secured by real estate.
- Shorter loan terms, typically six to 24 months, provide quicker liquidity.
- No involvement with property management or maintenance.
In California, the market for trust deed investing remains strong. The high demand for fast capital solutions in real estate transactions makes this type of lending especially relevant.
Understanding the Risks
As with any investment, there are risks to consider:
- In cases where the borrower defaults, the foreclosure process is the primary method of recovering funds.
- Market fluctuations can affect property values.
- Second trust deeds carry more risk, as they are subordinate to the first in repayment priority.
Working with an experienced hard money lender in California, like RTI Bridge Loans, is essential to minimize these risks through proper loan structuring and due diligence.
Why California Is a Prime Location
California continues to be a high-opportunity market for trust deed investing. With consistently high property values and a large volume of real estate activity, it presents numerous investment possibilities.
Based in Los Angeles, our team at RTI Bridge Loans is fully immersed in the local market. Our in-depth knowledge allows us to evaluate trust deed investments with accuracy and care.
Getting Started with Trust Deed Investing
Beginning your journey into trust deed investing is a straightforward process:
- Connect with a trusted hard money lender.
- Review available investment opportunities. We provide detailed information about the properties, borrowers, and loan terms.
- Select the investment that aligns with your goals.
- Receive monthly interest payments.
As a direct lender, RTI Bridge Loans handles all aspects of the loan process in-house, ensuring transparency and control.
Why Choose RTI Bridge Loans
RTI Bridge Loans has been providing bridge loans throughout California since 2004. We specialize in both first and second trust deeds, offering fast, short-term financing to real estate investors, developers, and property owners.
Our team has facilitated hundreds of millions of dollars in private loans and built long-standing relationships with our investors. Founder Robert Abbasi began investing in Los Angeles apartment complexes in 1986, and that experience has evolved into a national real estate presence with affiliated companies managing properties across the country.
We bring decades of firsthand knowledge to every transaction, providing a solid foundation for your trust deed investment.
Connect With Us
If you are considering trust deed investing or expanding into second trust deed investing, we invite you to speak with us. Our team will guide you through the process and help identify suitable opportunities for your investment goals.
Call us at (562) 857-2285 to get started.
RTI Bridge Loans is a direct portfolio lender based in California, providing short-term financing through first and second trust deeds since 2004.
Frequently Asked Questions (FAQ)
» What kind of returns can I expect from trust deed investing?
Returns vary by investment, but many range from 8% to 12% annually. Second trust deeds may offer higher returns due to increased risk.
» Is trust deed investing safe?
All investments involve risk. However, trust deed investing is secured by real estate. Partnering with a knowledgeable hard money lender in California helps mitigate these risks.
» How long is my money tied up in a trust deed investment?
Most investments are short-term, typically between six to 24 months. Loan terms are disclosed upfront.
» Do I need to manage the property or deal directly with borrowers?
No. As the lender, you are not involved in property management. RTI Bridge Loans services the loan and handles all borrower communication.
» Can I invest using my IRA or retirement account?
Yes. Many clients use self-directed IRAs to invest in trust deeds. We can assist you in setting this up if needed.
» What happens if the borrower defaults?
In the event of a default, we initiate the foreclosure process. Because the investment is secured by the property, this step helps recover the original investment.
