Because the loan is secured by real estate, the investor has a tangible asset to fall back on if payments stop.
A is a legal document that establishes a security interest in a property to protect a lender. It involves three parties:
A neutral third party that holds the legal title until the loan is satisfied or initiates foreclosure if the borrower defaults. Why Investors Buy Trust Deeds buy trust deeds
For those looking to diversify a portfolio, buying trust deeds provides a way to participate in the real estate market with the security of a lienholder position. Trust deeds in Scotland - Citizens Advice
Trust deeds are not as liquid as stocks. Your capital is usually tied up for the duration of the loan term. Different Contexts: Scotland vs. USA Because the loan is secured by real estate,
Experienced investors typically do not fund loans higher than 70% LTV . This ensures there is enough "cushion" or equity (at least 30%) in the property to cover the investment if a sale is required after foreclosure.
In many regions, a trust deed allows for non-judicial foreclosure , which is significantly faster and cheaper than court-involved processes. Key Risks and Considerations Why Investors Buy Trust Deeds For those looking
Trust deeds often offer higher interest rates than traditional savings or bonds.