The private mortgages market is exploding because banks are only lending 1/3 of the loans. So, many people stuck without financing from banks as there are investors outside that provide funds. This has created a great opportunity for the potential investors and hence, a number of people look for financing. There are a number of benefits of investing in private mortgages and these are discussed below:

Reduced Risk:

The greatest benefit of investing in a private mortgage or trust deed is the reduced risk in comparison to other investments.

For example, a 100000 dollar mortgage that is sold for 120000 dollars, mortgage buyer deals with partial mortgages, so that you can buy some of the payments. If it is a 20 year mortgage, then you could buy 60 to 72 months of those payments. There is a reduced risk in this type of investment because the asset is assigned to you and the investor. If the mortgage goes bad or the investor stop paying it, then you can retain the asset and possess the entire collateral in order to recover your investment.
Diversified Portfolio:
In addition to the reduced risk, the benefit of investing in a private mortgage is that it can help in diversifying your portfolio. Investing in a real estate is very much different than investing in a business or a stock market and with many expert building rebounding prices; it is a great time to buy back into the market.
A real estate investment is a great way to diversify your portfolio because they have less risk for loss of principal and loss of return. Banks only give 1% on your money, on a risk adjust basis, so investing in a private mortgage is still higher than any traditional debt product.

Retirement Benefits:

Private mortgages provide great benefits to the retirees. Before the economy was collapsed, most of the people get retired thinking they were going to earn 8% on their funds every year through retirements funds and have enough money for survival. Due to the economic slump, many are now getting back only 1% and are spending retirement savings much faster than originally anticipated.
Private mortgages can help a lot with the retirement as the average investor will get a return of 7% or 8% and with this return you can receive monthly payments. A retirement plan with privately investing in mortgages is a good way to consecutively recapture some of the lost yield and get you back on a retirement plan that makes sense.

Tax Benefits:

Also you can get benefit from taxes by investing in private mortgages. The return on the principal over time becomes the long term capital gain as against income. You can defer those taxes because they are not receiving the money all at once, but receiving those payments over time. Hence, if you are in a high tax bracket, then you can save a lot of money in this way.
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