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Land Trust- flexible, protective, and private |
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Category: Business Strategies Current Grade: C Total Views: 326 Member Comments: 2 |
Posted on: 03/21/2008 Posted by: RE_Advisor Blog Points: 7 View all blogs >> |
Land Trusts, when properly documented, are terrific vehicles that every real estate investor should have in their investor toolbox.
I have created several land trust investments- and here's why:
1- I can take over existing financing without violating the due on sale provision
2- I can protect title from all manner of problems.. things like tax liens, bankrutpcies, death of an "owner", other judgement liens, divorce problems, and more.
3- Flexibility: I can structure a transaction more easily and with more options than any other method I know of.. I can defeat problems related to "title seasoning" when it comes to "quick flips". I can bring in investor(s) in a way that provides them with far more protection- and structure priority payouts that are easily administered by a 3rd party. I can accomplish with the trust.. things like.. lease options, wrap around seller financing, quick flips, short sales, interval ownership plans... the list goes on and on.
4- The tax code provides SPECIAL provisions for those who have AN interest in a land trust AND reside in the property.. I can easily generate more MONTHLY CASH FLOW using this system. Email me details on this terrific benefit.. Turn marginal deals into GREAT deals using these special tax benefits.
5- In today's soft market, it is the single best way to invest- and you don't need new financing, assume any debt, and control properties with zero out of pocket cash if you follow a proven step by step plan.
6- Imagine being able to offer someone a way to own a home.. with as little as 3-5 months mortgage payments to move in, they take all deductions for interest and taxes paid on the loan, they require no bank qualifying, and they can split future proceeds with you- however you two agree. In the event of default, no foreclosure is required and a fast, fair remedy is in place from the very start. And because title is held by a 3rd party, corporate trustee (licensed and bonded), you don't have the usual risks that owner financing can pose!
The more you know about Land Trusts, the more business you can do!
Bill McKee
You say "Legally there is no such thing as a land trust"?
Hmm. Someone needs to write the Illinois legislature and tell them to strike the Illinois Land Trust statute from the record! Bill Bronchik says there is no such thing a land trust. Quit using that term.. it confuses people!
I'm not sure why you feel it important to say that land trusts don't exist.. when several states have promulgated statutes specifically described as land trust statutes, and they define what a land trust is. Hardly a "marketing term". Oh well...
I am a member of NARS- and use NARS documents when doing land trusts with 3 or more beneficiaries.
Land contracts? Yes, I used them in the past.. when I was less informed. Learned a lesson, too. One of the past owners who sold on contract, died. The title company would not insure title to my contract purchaser (when he wanted to refi and pay off the contract) until we had certificates of heirship signed by all potential heirs to the guy.. who died intestate! Yikes.. lesson learned. It took 6 months to get this straightened out.. and my purchaser was an attorney..
Uh, I don't use contracts anymore.
The land trust protects legal and equitable title from issues that affect "purchaser", "seller", and other "partners" (hey, these are not precisely defined descriptions- it's my short hand way to quickly refer to the participants and their typical roles, ok? )
Why use a properly drafted and managed LT?
1-defeats due on sale provisions if existing financing stays in place
2-flexible way to split profits, management, and investment among 2 or more people who happen to want to invest in a common real estate venture.
3-default issues are resolved far more quickly, with far less expense and in a fair and even handed manner using the land trust vs. land contract. Land contracts are typically pushed through a judicial foreclosure process that takes months to get on the docket and costs far more than other methods.
4- I can do "quick flips" without seasoning issues.. and other issues.. using the land trust. Contracts don't offer that same flexibility- and introduce more risk.
Other reasons exist, but I am running out of time!
Bill McKee
www.billmckee.com