A Self Directed IRA plan is a great way to invest in notes, mortgages and trust deeds. These instruments (secured or unsecured) are legal documents that extend credit from one individual or entity to another individual or entity in exchange for agreed upon terms.

A Trust Deed, or Deed of Trust, is a loan to a borrower secured by real property. The secured note, or promissory note, contains all the terms agreed to by the borrower including interest rate, payment amount and date, default provisions, etc. Should the borrower default, the lender can foreclose on the property and sell it to satisfy the debt.

With economic uncertainty and rules of the real estate game changing rapidly, “trust deed” investing is growing in popularity as a “non-traditional” asset to be held by a Self Directed IRA plan (Checkbook IRA, Real Estate IRA or Solo 401k).

Investing in this form of secured note with a retirement plan has the advantages of avoiding the volatility of the stock market and being able to truly diversify a portfolio.

Essentially, when you invest retirement funds in a Trust Deed, you’re taking on the role of being a lender…or bank. You’re lending directly to the borrower. In addition to having a secured lien position, your investment is protected by title insurance, property and fire insurance and an initial appraisal prior to the closing.

Following are a 10 helpful tips to insure a successful Trust Deed investment:

1.   Become an expert. Gain as much knowledge and expertise as possible.

2.   Seek professional help from an experienced, licensed broker.

3.   Avoid “junior” loans (2nd Trust Deeds) unless you’re very experienced.

4.   Physically inspect the  property and know the general values in the area.

5.   Never loan more than 60% LTV (Loan To Value).

6.   Obtain the maximum amount of title insurance possible.

7.   Make sure all funds go through escrow and title companies.

8.   Prior to closing, become familiar with the preliminary title report.

9.   Diversify your portfolio. No more than 20% TD funds into any one property.

10.  Fund the loans for no more than 3 years. Short term investments are best.

For more information about how to use a Self Directed IRA for investing in Trust Deeds, contact Safeguard Financial at 877-229-9763 or go to www.IRA123.com.