The Investment You May Miss in 2023

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. Rental properties and fix-and-flips require a hefty amount of available cash and time. Crowdfunding platforms have high investment minimums and excessive financial requirements. However, there is an often-overlooked real estate investment that breaks down those barriers; they are called trust deed investments. Since 2011, Ignite Funding has provided over 1,800 trust deed investments funded with over $1.4 billion in investor capital. Here’s how it works.

What is Trust Deed investing?

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. 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. 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 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. 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.

Building a reputation for reliability

Founded in Las Vegas 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. 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.

Becoming an investor and assessing risk

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. 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.

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

1. Do your due diligence

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

2. Schedule a consultation

Get the answers to any questions you may have about Ignite Funding and discuss how trust deeds can fit into your portfolio.

3. Get the ball rolling

Fill out an online application to create a free account, which you’ll need to make investments.

4. Review available investments

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.

5. Manage and track investments

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.

6. Reinvest and keep earning

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.