Epic Real Estate Investing - Subject-To and Land Trusts | Creative Real Estate Investing for Beginners | 1018

Episode Date: May 14, 2020

It’s never a money problem that holds you back but rather an idea problem! Creative real estate investing means that you use ideas in a place of money! In today’s episode, Matt thoroughly explains how LAND TRUST can be incorporated into your creative real estate investing to protect your deals and provide some additional flexibility and options. Moreover, you will learn how you can profit from your deals using this creative term and how it pertains to SUBJECT-TO transactions. Tune in and find out mor Learn more about your ad choices. Visit megaphone.fm/adchoices

The creative and creative real estate and creative financing is when an idea is used to buy real estate instead of using money. As a real estate investor, it's never a money problem, but rather an idea problem. You don't need a lot of money to make money here. You just need a lot of ideas. Boom! We refer to these creative ideas as terms. Terms like equity sharing, options, lease options, agreement for deeds, seller carryback, subject twos, raps, all inclusive trust deeds, and so much more. And right now, I'm going to veer from the curriculum a bit. to show you how the land trust can be incorporated into your creative real estate investing to protect your deals and provide some additional flexibility and options in how you profit from your deals, especially as how it pertains to subject to transactions.

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. attract convert exit matt terrio has been helping real estate investors do just that for more than a decade now if you want to make money in real estate keep listening if you want it faster visit r ei iase dot com here's matt a land trust is a legal entity comprised of a trustee and a beneficiary that take ownership of or authority over a piece of property at the command of the property

owner. For our purpose to creatively invest in real estate, a land trust allows the property owner to anonymously maintain all rights over a property and direct the actions of the land trust. The land trust is on title. You, the beneficiary, receives the rights to the property, of which includes, but is not limited to, the right to occupy, the right to rent, to develop, or to sell the property. The trustee will follow the terms of the trust agreement and act in the best interest of the beneficiary, you. A major benefit of a land trust is the ease of transferring ownership of the property to your heirs when you pass. Without a trust, an individual's will has to be assessed through the costly and time-consuming legal process of probate. Land trusts,

unlike people, don't die. So the succession plan set up in the trust remains in place without needing probate. It's why land trusts are a common instrument used in estate planning. And because they are so commonly used for that, a transfer to a land trust almost never throws up a red flag to the bank for your subject to transactions. The main benefit, however, of the land trust is privacy. The trustee's name is the only name that appears in the public records. As long as your name doesn't appear as the trustee, your ownership of the property remains hidden. And as a real estate investor, that can be very important, especially when your wealth starts to grow.

After the title of a property is transferred into a trust, the names of the owners cannot be disclosed without a court order. This helps to avoid litigation from the bad guys who may find or look for a reason to try and get some of your hard-earned wealth. Lawsuits, they happen. A land trust doesn't directly provide asset protection. But if the bad guys can't find your assets, it indirectly does. They can't take what they can't find. Now, the primary reason a creative real estate investor would use a land trust is to prevent a lender from invoking the due-on-sale clause on their subject-to transaction.

As we discussed in the last lesson on subject twos, most, if not all mortgages these days, include a due-on-sale clause. The clause allows banks to call a loan due when the title gets transferred. Now, just because they can doesn't mean that they will. In fact, they rarely do. But just in case they do, there is a legal law. workaround regarding this clause that can provide you an extra level of protection from the due-on-sale clause. It was in 1982 the United States Congress enacted the

Garnes Saint-Germain Act and under this act mortgage lenders cannot enforce the do-on-sale clause on a property that is a part of a land trust as long as the borrower is also the beneficiary. When a property is transferred into a land trust, only the deed reflecting the name of the trust and the trustee is recorded. The land-trust agreement where the beneficiary is documented is not recorded. So the beneficial interest can be bought, sold, or traded without anyone ever knowing, including the lender. Of course, laws are not always black and white. The subtle and debatable nuances of real estate investors using land trusts are much better understood by bar licensed attorneys who have years of experience using land trusts. And I recommend

you consult one to protect your interests and satisfy your questions and concerns. You don't need a lawyer to transfer title to a land trust, but I use an attorney for all of my land trust subject to transactions. And you'll understand why in just a minute. Here's how it works. As with your typical real estate transactions, purchasing a property with a land trust requires a closing to prepare, sign, and file all necessary legal documents. When you make the purchase agreement, rather than putting your name on the contract, use the street number and street name of your land trust. It would look something like this. Buyer, one, two, three, Main Street Land Trust, J. Jones, Trustee. You can create the land trust at any time prior to closing on the property. My closing attorney takes care of that

for me, which is who I also name as the initial trustee. This way, he can sign to close the transaction and my name never appears on the dotted line. He'll write in the seller as the beneficiary, and the seller will then assign the beneficial interest to my LLC. And then after we close, my attorney will resign as the trustee where I step in. Now, I am the trustee and my LLC is the beneficiary. Note that the change in the trustee and the assignment of beneficial interest are not required to be recorded. If someone were to look the property up, they would not find my name anywhere, but rather the name of the original trustee. Now, I fully own and control the property without the bank or anyone for that matter knowing. This is all information that you

should know. But don't be too concerned about how all of this works. Your closing attorney will handle all of this for you and see to it that you are compliant for your market. Let's move on to our next creative idea, the wraparound mortgage and the all-inclusive trust deed. See you next. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home for us, we got the cash flow. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.