7 Reasons to Use a Land Trust

I was cruising my directory for articles that I have been collecting and I came across this one about Land Trusts. I can't tell you how many times a Land Trust has saved me while taking ownership of a property. If you are a serious real estate investor, YOU MUST master this asset protection method. You will reap many benefits, financially and legally.

The land trust is a very powerful tool for the savvy real estate investor. A land trust is a revocable, living trust used specifically for holding title to real estate. Each property is titled in a separate trust, affording maximum privacy and protection.

Here are seven reasons to use land trust for titling property to real estate:

1. Privacy: In today’s information age, anyone with an internet connection can look up your ownership of real estate. Privacy is extremely important to most people who don’t want others knowing what they own. For example, if you own several properties within a city that has strict code enforcement, you could end up being hauled into court for too many violations, even minor ones. Having your real estate titled in land trusts makes it difficult for city code enforcement to find who the owner is, since the trust agreement is not public record for everyone to see.

2. Protection From Liens: Real estate titled in a trust name is not subject to liens against the beneficiary of the trust. For example, if you are dealing with a seller in foreclosure, a judgment holder or the IRS can file a claim against the property in the name of the seller. If the property is titled into trust, the personal judgments or liens of the seller will not attach to the property.

3. Protection From Title Claims: If you sign a warranty deed in your own name, you are subject to potential title claims against you if there is a problem with title to the property. For example, a lien filed without your knowledge could result in liability against you, even if you purchased title insurance. A land trust in your place as seller will protect you personally against many types of title claims because the claim will be limited to the trust. If the trust already sold the property, it has no assets and thus limits your exposure to title claims.

4. Discouraging Litigation: Let's face it, people tend to only sue others who appear to have money. Attorneys who work on contingency are only likely to take cases which they can not only win, but collect, since their fee is based on collection. If your properties are hard to find, you will appear "broke" and less worth suing. Even if a potential plaintiff thinks you have assets, the difficult prospect of finding and attaching these assets will discourage litigation against you.

5. Protection From HOA Claims: When you take title to a property in a homeowner’s association (HOA), you become personally liable for all dues and assessments. This means if you buy a condo in your own name and the association assesses an amount due, they can place a lien on the property and/or sue you personally for the obligation! Don’t take title in your name in an HOA, but instead take title in a land trust so that the trust itself (and thus the property) will be the sole recourse for the homeowner’s association’s debts.

6. Making Contracts Assignable: The ownership of a land trust (called the "beneficial interest") is assignable, similar to the way stock in a corporation is assignable. Once property is title in trust, the beneficiary of the trust can be changed without changing title to the property. This can be very advantageous in the case of a real estate contract that is non-assignable, such as in the case of a bank-owned or HUD property. Instead of making your offer in your own name, make the offer in the name of a land trust, then assign your interest in the land trust to a third party.

7. Making Loans "Assumable": A non-assumable loan can become effectively assumed by using a land trust. The seller transfers title into a land trust, with himself as beneficiary. This transfer does not trigger the due-on-sale clause of the mortgage. After the fact, he transfers his beneficial interest to you. This latter transaction does trigger the due-on-sale, but such transfer does not come to the attention of the lender because it is not recorded anywhere in public records. This effectively makes a non-assumable loan "assumable".

As you can see there are many creative and effective uses for the land trust, limited only by your imagination!

William Bronchick, CEO of Legalwiz Publications, is a Nationally-known attorney, author, entrepreneur and speaker. Mr. Bronchick has been practicing law and real estate since 1990 www.legalwiz.com

P.S. If you need a good Land Trust attorney for South Florida, contact Paul B. Woods, Attorney at Law, (305) 559-9060, mobile: (305) 803-1818, email: pwoodslaw@gmail.com

Written by +Bob Burns.

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cya MREIA's President about.me/RobertKBurns Telephone #: 305-300-6242 email: rkburns@investmentpropertiesmiamiflorida.com MREIA's Web Page: www.miamireia.com

Hypersmash

Real Estate Investment Strategies for Rehabbing Houses

As you are starting out on your road to become a successful Real Estate Entrepreneur, you are going to eventually purchase a property that has a lot of

equity but you need to extract that it from the property by repairing or rehabbing it. One of the best ways to generate cash as an investor is to rehab properties for resale.

Buyer Beware!

Rehabbing can make you money but you as an investor have to be careful. Two of the biggest mistakes made by 1st time rehabbers are TIME & MONEY.

Although your actual time commitment is minimal, these projects from purchase to sale, take a significant amount of time. To finish your rehab project, plan six months to one year. That means you may not see any profit for a while. Hopefully, your projects will finish much faster, but mentally commit yourself to problems and delays that will hurt your projected completion date.

The second negative is MONEY. Unless you have a partnership arrangement, you will have to come up with money for these projects. MREIA consistently puts $10,000 to $20,000 in repairs alone into a house. Add that to your purchase price and you can see you'll need access to quite a bit of cash. Plus, that money could be tied up for 180 days or more.

These negatives aren't anything you can't overcome. You'll see how important it becomes to have a well thought-out plan to minimize the negatives and accent the positives of rehabbing a property.

Estimate Repairs - Rocket Science?

Once you have found a property to rehab, you need to get a good, not great, idea of how much money you are going to need to repair. Dealing with sellers they always place the repair costs to a minimum. What ever amount they say I double it. Estimating repairs isn't as difficult as you might think. Once you rehab a couple of houses, you'll know what you're repairs will run. This is where a check or punch list becomes invaluable.

Your Finished, NOW it is time to get PAID!

The marketing strategy is to develop several plans to help you get to your objective - MONEY now or in the near future. You, the rehabber have several options:

1. Rent It!
   • Traditional Landlording
   • Section 8 or Plan Ocho
2. Sell It!
   • For Sale By Owner (FSBO)
   • Hire a Realtor.
3. Lease Purchase It!
   • Combination of Renting and Selling!

Rehab Process Outline Here it is:

1. We are going to find a distressed property that has mucho equity!
2. Buy it using a formula (MAO Rule) that calculates your holding & rehab costs.
3. Rehab the property to bring it back to neighborhood standards or beyond.
4. Develop a marketing strategy that will attract either an investor or owner occupant.

Written by +Bob Burns.

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"Be Viral!" MREIA's President about.me/RobertKBurns Telephone #: 305-300-6242 email: rkburns@investmentpropertiesmiamiflorida.com MREIA's Web Page: www.miamireia.com