There is no mystery to trust deeds. They work much like other fixed income investments, such as bonds, with a few key differences. When you purchase a bond, you’re loaning money to a corporation or government. In exchange, you receive interest income throughout the term of the loan and repayment of principal at maturity. The loan is backed by the corporation’s assets or the full faith and credit of the government.
When you invest in a trust deed, you’re making a mortgage loan backed by the borrower’s property. This could be anything from a shopping mall to a condominium to a church. In return, you receive regular interest payments throughout the term of the loan and repayment of principal at maturity. An underwriter such as Sterling Pacific serves as liaison between borrower and lender and ensures terms of the loan are satisfied.
The chief difference is most fixed-income investments are misnamed. Bond markets can be highly volatile, seesawing with interest rates and other economic factors. Trust deed investors suffer no such uncertainty. The interest rate is fixed, meaning you get a consistent rate of return – historically competitive with other fixed income investments – with measurably less risk.
SPF securitizes Real property loans for the following:
- Single Family Homes (non-owner occupied)
- Condominiums
- Commercial and Industrial properties
- Apartments
- Construction
- Acquisition & Development
- Equity/Profit Participation
- Churches
- Land
- Discounted Notes
