How are Your Earnings on Your Investments/Savings accounts?

If you have worked hard saving your money and investing you probably expect and rely on that money to be working for you. However, it's pretty tough these days when the earnings on the savings accounts, money market accounts and CDs are so incredibly low. Maybe you are doing better in stocks, bonds or mutual funds, but there are still other ways people are getting higher returns on their money.

Note and trust deed investing has been around for a long time, but these days it's seeing some amazing growth. A lot of this is because banks are turning down some very good loans and with the sub-prime lenders basically out of the picture and it opens doors of opportunity for private money investors to fund loans like this. Most of the private money financing are short-term (generally 2-5 years) and can offer returns of 12-15% annually. And they are secured with a note and trust deed on property ususally in first position. An individual doesn't have to have millions to invest. Some of the loans we offer start at $20,000 and then can go up to millions. We work with a lot of rehabbers and buyers of foreclosures right now, so in our area they are buying homes in the $50,000-$150,000 range.

To get started, there are a lot of online resources out there with basics about private money investing. If you choose to work with a broker, make sure they have a good reputation and hopefully they have been in the business long enough to have the experience needed. An investor does not pay a broker, but instead the borrower pays the broker for setting up the loan. Brokers are a great way to learn about private money investing and you should be able to meet with them and they should be accessible enough to get all your questions answered. In the beginning, when a broker is giving you a list of the available offerings, you may actually want to see the properties offered as collateral for the loans - if you can. Investors can vary in the types of properties they are willing to loan on, so if you have a preference let your broker know. For example, some of our investors only like properties with a cash-flow. Others are willing to take more risk and will loan on development projects. It's okay to be picky and choose an investment in your comfort level. Over the years, some of the relationships we have with our investors are at a point where they no longer require that they see the properties, but still review our package with pictures, summary, pre-liminary title report, plat map and any other pertinant information. In fact some of our investors are not even in our area, but rely on us to inspect and research each and every deal.

With private money investing and the higher yields it involves, it has a lot of appeal for many investors. But also be aware of the how these investments differ from money market funds, CDs, savings accounts, etc. Specifically, private money investments are not guaranteed or insured or backed by any government entity. It's more like investing in the stock market. So there are risks involved and less liquidity of funds, but that's one of the reasons why investors can charge more interest on these loans that they fund. There are times when a borrower may default and in the worst case scenario, the investor can end up owning a property. Again, this is why choosing a good broker is so important because they need to know how to put together a loan with conservative LTVs (loan-to-values), good collateral, have borrowers that are willing and able to pay and that have at least one good exit strategy if not more. If you are interested in learning more, we would be happy to share our experiences with you or you can visit us online www.GreysonFinancial.com.