Trust Deed and REIT investments are seemingly similar at first glance. They both utilize crowdfunding type platforms that open the door to commercial real estate investments at a lower “buy-in” than your typical real estate venture (i.e. rentals, fix-n-flips, etc.); and offer a steady stream of passive income. There are some key differences that you should be aware of when deciding which investment vehicle is best for your portfolio and for your tolerance for risk.
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Defaults are always a possibility for anyone lending or investing in a “crowdfunded” real estate development. How the default situation is handled can be detrimental to the return of your initial principle investment. As a loan servicer for Trust Deed real estate investments, Ignite Funding stands behind each and every loan that it originates, often wearing many different hats in order to protect and return investor capital when default situations arise. Ignite utilizes its real estate expertise to act on behalf of its investors as Default Coordinator, and an Asset Manager if a default is to be resolved through foreclosure. At Ignite Funding, we have a proven track record in default resolution that is backed by results to our investors, having worked through and grown from the downturn in 2008.
When borrowers take out a loan for a property, they have to sign a promissory note--a document pledging to repay the loan. Depending on where the transaction takes place, this document could be either a mortgage note or a deed of trust. The main difference between the two is in who holds the title to the property while the borrower is paying off the loan.
Every piece of real estate in the United States is subject to property taxes that you will be expected to pay each year. If you fail to pay these taxes your property will become tax delinquent, which is a road down the slippery slope of tax foreclosure. Tax foreclosure is the seizing or repossession of the property by the county or municipality where the property is located.
WHAT DOES IT MEAN AND HOW DO I DO IT?
To change your portfolio, you need to change your investment thinking. But how do you do that? First, as an investor you need to discover a different avenue for investing, rather than the traditional route of stocks and bonds. One alternative route would be Trust Deeds in real estate. At Ignite Funding, we offer Trust Deed investments that match reliable real estate borrowers with investors seeking capital preservation in collateralized real estate; this alternative allows you to diversify your current portfolio. There are many reasons why Trust Deed investing may be right for you:
Deciding where to invest your money is never an easy task. The biggest question being, where are you going to get the most return on your investment?
Tune in to E! Entertainment as sponsored programming on Thursday, February 11, 2016 and Bloomberg International as sponsored programming on Sunday, February 14, 2016 featuring Ignite Funding.