In my New Years post I hinted at the fact that when you lend privately, not only are you supercharging your savings by boosting your savings yields, but you’re providing needed and necessary capital that helps create wealth and opportunity for others—thereby contributing to the growth of the economy. This is an important aspect of trust deed investing (a.k.a. private lending), that shouldn’t be overlooked.
Private lending gives back to the community and stimulates the local economy. When you loan to a real estate investor who is using your funds to buy bank-owned property, think of how those funds get multiplied throughout the economy. This multiplier effect, according to some economists, can be as high as 20; that is, every $1 loaned multiplies to $20 as it works its way through the system. Consider the following: Your loan finances a transaction that results in fees to title companies, transfer taxes to the county and sale proceeds to the seller. The real estate investor hires craftsman to repair and remodel the home. The remodeled home now qualifies for conventional financing, so the investor might then sell the property to a buyer at a profit. That’s a lot of new “green” that gets created by your private loan.
Your money helps convert distressed real estate into safe and productive housing. And that’s good for local communities. What can be more “green” than creating opportunity for prosperity and economic vitality?