Trust deeds are a profitable real estate investment for passive income

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As an investor, having endless investment opportunities at your fingertips is both a blessing and a curse. While it means there are many options to make a great return, choosing which avenue to pursue can be tedious and difficult.

Now more than ever, people are looking for ways outside of the stock market to invest their money intelligently and diversify their portfolio. Real estate is one of those vehicles.

Sadly, many investors jump to the conclusion that real estate is not a realistic investment for them, but not without good reason. Traditional investments like rental properties and fix-and-flips require a hefty amount of available cash and are a significant time commitment. Or, the latest real estate crowdfunding platforms have high investment minimums and excessive financial requirements. However, there is an often-overlooked real estate investment that breaks down those barriers and can still provide investors with the same benefits; they are called trust deed investments. 

Since 2011, Ignite Funding has provided over 1,400 trust deed investments funded with over $1 billion in investor capital. Here’s how it works.

In simplest terms, trust deed investing means you act in the capacity of a bank: You loan money to a borrower who will utilize your capital to add value to a piece of property. Your name is recorded on the deed of trust, which makes the respective property collateral and protects your investment.

At Ignite Funding, their company does not believe in outsourcing. Between the loan underwriting and origination, capital fundraising, loan servicing to investor and borrower relations, they handle the entire process. This is what makes it a truly passive investment for their investors.

To raise capital for the projects, they use a “crowdfunding” method to aggregate funds from multiple smaller investors and pool the investors’ capital to directly fund the loans. This enables Ignite Funding to implement a minimum of $10,000 to invest on a single loan.

The loans are typically short term, ranging from six to nine months in duration. During that time, you earn a monthly fixed income of 10% to 12% annualized interest. For each investment, you will receive a copy of the recorded deed of trust, title insurance and liability insurance on the property with your name listed as a multi-beneficiary. This makes the respective property the collateral to your investment.

Founded in 1995, Ignite Funding has evolved with the changing real estate landscape. Their original business model began as a traditional home mortgage lender to homebuyers. The demand for lending from homebuilders and developers reshaped their business in 2011. In the years since, Ignite Funding has funded more than $1 billion in loans with investor capital.

Ignite Funding has earned a reputation as a well-respected and reliable resource for lending across the western U.S. When banks are not lending, Ignite Funding is. They take pride in working with a small, carefully selected group of borrowers who have a proven track record.

They follow a strict underwriting process when evaluating their loans before they are presented to investors on a matrix which includes location, market conditions, various valuation methodologies, borrower track record and exit strategy, among other factors. Individual projects can be for the acquisition of land, horizontal development or construction of either residential or commercial properties.

Firstly, you do not have to be an accredited investor to invest with Ignite Funding. Ignite Funding is licensed with the State of Nevada’s Division of Mortgage Lending, which requires investors to meet certain suitability requirements, such as a household net worth of more than $250,000 (excluding their primary residence) or a household net annual income of more than $70,000 for the previous two years with the expectation they will continue to earn that income.

Every investment has inherent risks. In fact, Ignite Funding would advise that if someone tries to sell you on guaranteed returns, you should run in the other direction.

With trust deeds, the risk lies in the illiquidity of the investment and the potential for the borrower to default on the loan. At Ignite Funding, they work on the behalf of the investors to resolve any default issues that may occur. In some cases, a foreclosure may be the best option to help mitigate the loss of capital. In a recent video, Ignite Funding walked through the ways they handle default situations.

To start investing with Ignite Funding, they recommend these six steps:

You should always read up on any company you invest with. Be sure to browse the information you need verify the compliance of Ignite Funding’s operations.

Get the answers to any questions you may have about Ignite Funding and discuss how trust deeds can fit into your portfolio. Plus, you can schedule the consultation at your convenience.

Fill out an online application to create a free account, which you’ll need to make investments. After your application is submitted, the compliance department will make sure all required paperwork is completed.

To make your first investment, check out what is available. Your investment representative will help answer any questions about the investment and walk you through the paperwork and funding process to execute an investment.

After making your first trust deed investment, you will start accruing interest on the day the loan is funded. Interest payments are paid in the arrears and disbursed directly to you on the 15th of each month. You can manage and track investments through Ignite Funding’s client portal online.

Once the loan is paid off, your capital is returned to you. You can reinvest in a new loan (and continue earning double-digit returns) or use your funds for other plans.

To learn more about trust deed investments with Ignite Funding, schedule a consultation at ignitefunding.com or text the word “investments” to 844-552-7022.

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