BiggerPockets

Can someone explain the land trust method?
Can someone confirm if it works, or if it doesn't work?

Some of the BP members who are reps for transactional lenders are saying that the method works, and others are saying that it doesn't work.

There is way too much to a landtrust for you to get in one post but I'll hit some key points. It works only as well as you set it up. There are different ways to set up a landtrust. All you are doing is holding title to the property in a landtrust until you find a buyer/renter.

Benefits:

Let me explain about setting up a simple landtrust.... you find a seller who doesn't have enough equity to make it work for you buy the house outright. So you have them deed the property to a landtrust with a 3rd party trustee (preferrably someone you know and TRUST or an LLC owned by someone you TRUST). The beneficial interest go to the owners. You then have the owners assign the beneficial interest to you or your company. The only item that is filed at the court house is the new deed. You get a power of attorney (make sure it's a durable power of attorney - that means it continues to be in affect should the person die) so you can act on behalf of the sellers to change insurance etc.... You do want to change the insurance so you are on the policy.

Does it work? Oh yeah..... I have done many of them and been paid at closing with the paperwork I submitted to the title company showing my beneficial interest in the landtrust.

I have heard of this method, but I thought that most lenders would rather see a standard P&S agreement rather than a land trust? Obviously I know that it is up to the individual lenders what they accept, but shouldn't we apply our practices to the lowest common denominator?

Oh, I forgot to edit that part of my post out. Anyway, my question still stands. I thought that most lenders don't like to see land trusts?

Hey Jodi - I use 2 local title companies - Federal Title in Mesquite TX & Commerce Title in Grand Prairie.

Federal Title is owned by an attorney/investor/hard money lender.

Christopher:
I haven't had a problem yet with my landtrusts where the lenders are concerned. They like getting the back payments caught up and they like the fact the payments are now being paid on time. We just took one of the lender's non-producing assets that would have gone bad and brought it back to a producing asset again.

Yes, I do and I have clients all over the US that do as well.