South Jersey Real Estate Investors Association

Why Use a Land Trust?

By Mr. Land Trust®, Randy Hughes

 

Do you remember 1969? Probably not. You may have been born after 1969 and did not find real estate as an investment until many years later. I remember the year 1969 very well. It was the year in which I purchased my first rental house. I was still in college and realized that I needed to break the cycle of poverty in my family.

First, I decided to get more education than anyone else in my family. So, I went to college and majored in business. While studying in college, I realized that most people in America who became wealthy did it through investment real estate. My initial interest was in apartment buildings, but since they took large amounts of down payment money (the “nothing down” concept had not been invented yet) I defaulted to the single family home as my IDEAL investment vehicle.

By the time I graduated from college I had acquired three rental houses and one small office building. After graduation I continued acquiring rental houses and titling them in my name personally. One sunny morning I woke up and realized the potential risk I was creating by owning all these properties in my own name. These were the days before you could access the county recorder’s office online. But, you could go down to the court house and walk into the recorder’s office to look up each owner of every property in town. Wow, was I stupid!

I began to research different ways of holding title to real ... Read More…

Land Trusts vs. Limited Liability Companies

By: Mr. Land Trust®, Randy Hughes

 

Recently I read an article by an attorney telling his readers not to use a Land Trust. He recommended titling your investment property in a Limited Liability Company. His reasoning was that Land Trusts are only a “deterrent” to a lawsuit and they do not provide “true” asset protection. The attorney went on explaining how any lawyer “worth his salt” would find out you are the beneficiary of a Land Trust as the result of a judgment debtor’s exam (which is a hearing in a court room . . . sometimes called a Citation to Discover Assets). The attorney writing this article concluded that you have “zero” privacy with a Land Trust and if you want privacy you should “save the expense” of a Land Trust and title your investment real estate directly into an LLC (Nevada or Delaware).

After more than 40 years of in the real estate investment business, I can spot an attorney who understands the law but does not have practical real world experience. I agree that LLC’s have better asset protection than a Land Trust, but Land Trusts have far better privacy elements than LLC’s. I use LLC’s in my business but NOT to hold title to investment property.

Let’s review the benefits of using a Land Trust.

Land Trusts:

1. Are NOT registered anywhere on the planet
2. Do not require a registered agent
3. Pay no franchise taxes
... Read More…

Myths about Land Trusts

By: Mr. Land Trust^®, Randy Hughes 

I write and teach a lot about the many benefits to using a Land Trust to hold title to real estate investments. There is a lot of misinformation in the marketplace about Land Trusts and a lot of bad advice given regarding these title holding trusts. After using these trusts for more than 40 years, I have found that the myths outnumber the facts. In this article I will dispel some of the myths that I hear over and over.

MYTH: Only bare land can be put into a Land Trust

TRUTH: Any real estate (or real estate related asset) can be titled in a Land Trust

MYTH: My lender will not let me close my deal using a Land Trust (LT)

TRUTH: This depends on if you are using borrowed funds from a lender that must qualify you in the secondary market. If you must meet secondary market guidelines it is true that you must close the deal in your name, but you can put the property into a Land Trust the day after closing. Once you have 10 secondary market loans (the maximum allowed) you must use a portfolio lender and they will let you close using your Land Trust.

Note: Bank of America WILL let you close four secondary market loans using a Land Trust to take initial title. However, you must use an Illinois Land Trust and the property must be in Illinois.

MYTH: Do I have to get a tax ID number for my LT?

TRUTH: The answer is no. Nor do you have to register your Trust Agreement with anyone.

MYTH: You can't do a Short Sale ... Read More…