Trust deed investing is a type of real estate investment in which an investor provides funding to a borrower secured by a trust deed on a property. The trust deed is a legal document that grants the investor a lien on the property, which serves as collateral for the investment.
In trust deed investing, the borrower typically cannot obtain financing from traditional sources such as banks or mortgage lenders, either because they have poor credit or because the property they are purchasing is considered too risky by traditional lenders. The investor provides the necessary funding, and in return, receives interest payments on the loan.
The trust deed investor's investment is secured by the property itself, which means that if the borrower defaults on the loan, the investor has the right to foreclose on the property and sell it to recoup their investment. Trust deed investing can provide investors with a higher return on investment than traditional investments, but it also involves a higher degree of risk. As with any investment, it's important for potential investors to conduct due diligence and understand the risks and potential rewards before investing in trust deeds.