Investing in trust deeds for some may sound a bit vague especially if they are not familiar on how this kind of investment works. For most people who are looking for real estate investment that provides monthly earnings, rental property investment is the most often choice of beginners and new retirement investors. However, managing rental properties could be difficult most of the times. There are so much things that are required in order to keep your rental property generate income such as finding good paying tenants who would take care of your property well, repairing and maintaining the property in order to keep its value, payment of mortgage and taxes, and other tasks that landlords or property managers do.
Investing in trust deeds is simpler than rental properties but same stream of income could be received by your retirement account
Trust deeds investing may not be as visual or tangible compared to owning rental properties and seeing how your investment works, but the stream of income is similar to what you can get from rental property investment. You would also experience how it feels like to earn monthly income through the agreed payment scheme imposed on the promissory note that the borrower issued. This agreement is legally backed up by the trust deed itself which guarantees the property of the borrower in case he or she made a breach on the agreement. The trustee or the trust deed investment company will help you recover your investment or the remaining loan amount through the sales of the property.
Investing in trust deeds saves you from the troublesome work of a landlord or a property manager, instead, it allows you to become like a bank. Your retirement funds are your initial investment that allows you to become a lender. The amount you lent earns interest which is paid to your small business retirement account monthly together with the installment of the principal amount until the debt is completely paid on the due date stated on the promissory note.