For investors
Trust deed investing: real estate debt secured by property.
Learn how investors participate in short-term real estate loans secured by a recorded deed of trust. Information is provided to qualified investors who contact our desk.
What trust deed investing is
In a trust deed investment, investor capital funds a loan to a real estate borrower. The loan is secured by a deed of trust recorded against the property, so the investor’s position is tied to real estate rather than an unsecured promise. Many of these loans fund the same deals we arrange for borrowers, such as fix and flip and commercial bridge projects.
New to the topic? Start with what a trust deed investment is.
Why investors consider trust deeds
- Income from interest payments instead of rents or appreciation
- Defined terms, often one to three years
- Security in real property
- No tenants, repairs or property management
How to evaluate an opportunity
- Loan-to-value: the equity cushion between the loan and the property value.
- Lien position: first position is paid before junior liens. See first vs. second position.
- Borrower: experience, credit and track record.
- Exit: how and when the loan will be repaid.
- Documentation: recorded deed of trust, title insurance and hazard insurance naming the lender.
Understand the risks
Trust deeds are not insured or guaranteed. Borrowers can default, property values can fall, foreclosure takes time and money, and funds are generally not available until the loan is repaid. Read trust deed investing risks before committing capital, and consult your own financial, tax and legal advisors.
Trust Deed Investing guides
Frequently asked questions
What is a trust deed investment?
It is an investment in a loan secured by real estate through a recorded deed of trust. The investor funds the loan and receives the borrower’s interest payments, with principal repaid at maturity.
Are trust deed investments guaranteed?
No. They are not insured or guaranteed, and investors can lose money if a borrower defaults and the property does not cover the loan.
What is the difference between first and second position?
A first position trust deed is paid before any junior liens. A second position carries more risk because it is paid only after the first lien is satisfied.
Who can invest in trust deeds?
Eligibility depends on the offering. Some are limited to accredited or otherwise qualified investors under securities rules.
Related financing
This page is general education, not an offer to sell or a solicitation to buy any security, and not investment advice. Any investment opportunity is offered only through appropriate documents to eligible investors. Past performance does not guarantee future results.