A trust deed investment is when someone borrows money to buy a house in the state of California. Unlike the other states in the union, California calls the instrument that secures the property that money is loaned upon a trust deed. Other states refer to this instrument, which is recorded against the property, as a mortgage and mortgage note. In most states, two instruments are recorded against the property. In California, you will only find on instrument and that is the trust deed of record.   

Trustee  
The borrower is called the trustee in the trust deed equation. In other states, they would be called the mortgagee. The borrower is the person who wants to purchase a home but cannot afford to pay for the entire property in cash. They take out a mortgage, or a trust deed. They are then called a trustee of the trust deed.   

Trustor  
The lender is called the trustor. In other states, they would be called the mortgagor. They are the party that is responsible for lending the money to the borrower. This can be a bank or an individual investor. Anyone can record a trust deed against a piece of property in California as long as they have a signed agreement from the borrower and the borrower has entered into the agreement.   

In most cases, the trustor is a bank or some other lending institution. This is not always the case. In some cases, the trustor is an individual investor. The parties enter into an agreement in which the borrower agrees to pay a certain amount of money in interest and principal towards the loan for a certain period of time. If the borrower defaults on this promise to pay, the lender has the option of foreclosing. They have to toss the buyer out of the house and take over the house, presumably to sell it. This is easier said than done. Foreclosure proceedings can take months and most individual investors cannot tie their money up for such a long time. Legal fees can also be astronomical.   

Some investors form a joint venture to invest in trust deeds. This takes pressure off of an individual investor. The investors have to pass the scrutiny of the state of California before they are able to actually invest in trust deeds that are received from trust brokers. Trust brokers are those who will get borrowers who cannot get a loan on the regular market and need to find a trust deed investor who will finance them. In most cases, the borrowers who go this route have poor credit or little money and are willing to pay more in interest towards the loan, making it a lucrative investment.   

So the major players in the trust deed investment game are the trustees or borrowers who borrow the money for the home; the trustors or lenders, who put up the money for the home and if applicable, the broker who hooks the two of them up for a fee. Then there is the property which is the collateral that is used to secure the trust deed.