Commercial Real Estate Broker · Fontana, CA · Member since 2008 · 68 posts · 20 votes
I just flipped 3 properties today to a all cash investor using a land trust. I had never done it before and I was skeptical but I closed all three deals same buyer within 3 hours.
Here are the steps if you want to use a Land Trust to flip:
1. Put in your offer as xyz title vesting tba in escrow.
2. Get offer accepted.
3. "Street Name" Land Trust Trustee xyz (whatever buyer that is in Step One)
4. Find a cash buyer
5. Sell your land trust to Cash investor ( Wholesale Fee)
6. Cash Investor is the 100% beneficary
7. He wires money to escrow.
8. Property sold
9. Beneficiary (Cash Investor) fires xyz as trustee and assigns his own trustee for property.
NO EXTRA COST FOR A DOUBLE CLOSE USING TWO ESCROWS
Real Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
16y
There are a few ways to do that. In an LLC you just fund the LLC. Or show personal funds with a letter stating that you will fund this purchase with personal funds. (not all banks will accept this, some want the buyer, escrow check and verfications of funds letter to have the same vesting)
When you show the personal funds as part of the POF landtrust. You lose the key ablility of the landtrust. The ablity to remane unkown and do business.
This thread is much like the whole REI industry. Hyped up simple information, sold to people with no working knowledge.
There are no secrets in real estate, there sure are no secrets for sale in real estate.
Those than can do. Those that cant GURU.
You have 4 things you need to succeed in this game.
time
money
knowledge
a good credit rating
without those you are pretty crippled in what you can do. The good news. Those fours things can be aquired with a little effort.
Real Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
16y
You would not send an addendum. You would structure the offer in the name of the landtrust. Changing the name on an REO contract after the fact is a no no in this world.
I am tending to not believe the claims made by various posters in this thread. As the little details like above have been missed.
Real Estate Investor · Fort Lauderdale, FL · Member since 2009 · 14 posts · 9 votes
16y
How do you work out the POF? I know that when I purchase an REO in an LLC the bank requests the POF be in the name of the LLC. How is this handled with a Land Trust?
I don't know if all banks are the same but all the ones that I dealt with have needed that. Has anyone found this to be different and if so how did you get around it?
Real Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
16y
There are a few ways to do that. In an LLC you just fund the LLC. Or show personal funds with a letter stating that you will fund this purchase with personal funds. (not all banks will accept this, some want the buyer, escrow check and verfications of funds letter to have the same vesting)
When you show the personal funds as part of the POF landtrust. You lose the key ablility of the landtrust. The ablity to remane unkown and do business.
This thread is much like the whole REI industry. Hyped up simple information, sold to people with no working knowledge.
There are no secrets in real estate, there sure are no secrets for sale in real estate.
Those than can do. Those that cant GURU.
You have 4 things you need to succeed in this game.
time
money
knowledge
a good credit rating
without those you are pretty crippled in what you can do. The good news. Those fours things can be aquired with a little effort.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Jeff, you bring up some good points and there are several red flags waiving in this thread. Thanks for pinting them out for all to see.
Be careful people, complete your due diligence and run your plan by your experienced and competatnt RE attorney before proceeding with RE transactions of this nature.
Real Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
16y
Originally posted by Darryl Dean:
Concerning Anthony's Land Trust:
I imagine that it has already been emailed to 10 requesters already!
Concerning how to successfully submit your REO offers:
Just ask Stephanie to school you about how Lee Kearney - The #1 Wholesaler in Tampa does it.
Lee Kearney does 20, or more REO deals EVERY month! So he "wrote the book" on how you probably want and need to be doing it too.
You can email me privately if you need more information on this matter...
Lee does REO's like this:
1 - "NO contingencies"! PERIOD!
2 - Pay your Realtor "BOTH sides of the
Commission".
3 - Close in 30 days
4 - Call and get the LOCKBOX CODE!
5 - Only work with the Top 10 REO
Agents ( they do 80% of all the
deals!)
6 - Always WIRE your payment to the
BANK, never by check!
7 - DOUBLE CLOSINGS
(NOT "Simultaneous" closings)
8 - $1000 DEPOSIT (or $2000, if lots of
competition)
9 - EMAIL your Offers in (NOT by fax!)
10 - FULL DISCLOSURE NOTICE in all
Contracts!
I look forward to your responses!
[SOLICITATION REMOVED]
darryl dean
Austin, Texas
Here is a red flag
"Always WIRE your payment to the BANK, never by check!"
Since when do banks do closings?
a 1K or 2K deposit is a joke to a real investor. I have placed the entire purchase price in escrow.
When it comes to the whole REI/Guru "thing". Only a certain sect of the human species would take a bite at this chum. :wink: :idea:
Real Estate Investor · Atlanta , GA · Member since 2009 · 70 posts · 15 votes
16y
Although I have not used a Land Trust I have the package to do them. I absolutely know folks that are offering in LLC's then selling the LLC's. The Land Trust could settle your assignment issues that people have with REO's, but you still need to make sure your EMD and POF are in tact.
Some of what I read had me shaking my head though, also it all just seems like too many layers. The Real Estate Attorney for your local area will help you because as we see state to state trust work a little different. I say this is not "all" Guru-hyped and is being done everyday until the rules change.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
16y
Have any of you consulted your CPA on using the land trust?
Do you know that there can be tax implications? It may be a point overlooked, and probably so, as I have not seen mention of it in this thread.
Homeowner · Littleton, CO · Member since 2011 · 3 posts · 0 votes
15y
Great thread!
What precautions can one take to prevent what happened to Warren and Maureen Nyerges in Florida when Bank of America foreclosed on their house - which they paid CASH for, and never had a mortgage of any kind, much less with Bank of America?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by F RH:
Great thread!
What precautions can one take to prevent what happened to Warren and Maureen Nyerges in Florida when Bank of America foreclosed on their house - which they paid CASH for, and never had a mortgage of any kind, much less with Bank of America?
This thread is about 2 years old but I believe it to be of importance to contine the discussion, particularly since wholesaling REO properties is such a hot topic these days.
I have wholesaled 5 deals this year alone using a trust and sold to an all cash buyer.
The steps outlined in the begibnning and talked about in general format throughout this thread are not entirely correct so i will address them as we move forward here.
First off, when making the offer, it is better to vest the offer in the name of the trust you intend to use (I always use the "street name trust" and often include the numerical address as the name. Once the offer is accepted, I form the trust using the trust docs created and the trust certification needs to be notarized by the trustee (not the beneficiary as stated by the OG poster.)
The trust certification requires a social security or EIN number so you have two options, aply for a new EIN in the name of the trust or use an existing EIN from one of the beneficiary's current entities. This is filed with the state so the OG poster was also incorrect that nothing is filed with the state.
Then, the escrow/title company will need to have the original trust certification and the trust docs.
There were many other falacies mentioned in this thread, but these are the few I can remember for now. I will address any others if asked.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
Belinda, I am not sure what you mean by "we have closings and not escrow accounts". A closing of a RE transaction may be completed either by an escrow company or by an attorney. You can close with an attorney in any state. Some states use attornies only while others you can have either escrow or attorney. New Jersey for instance uses an attorney for RE closings as they do not have escrow companies. They do of course use title companies as do all states.
Can you be more specific on your questions regarding steps 1 and 3? I did not lay oyut the steps and it is likely that they were outlined incorrect in this thread anyways, so it would be better to start from scratch and ask any specific questions you may have.
Real Estate Investor · Champaign, IL · Member since 2012 · 30 posts · 1 vote
14y
This is great information as I plan on using this model for my first deal. I just have a few (but basic questions)...
1. Who is the trustee? Who is the beneficiary? Who is the grantor?
2. When "selling the trust", what exactly is being sold? Are you simply adding the buyer's name to the trust? If so, are they added as a trustee, beneficiary, etc.?
3. Once the entire proceeding is complete (closed on the trust and the property), how do you DISSOLVE the trust? (in case the buyer doesn't want to keep the property in it)
4. I'm reading the Illinois land trust form and at the end, it asks for "insert title of signing authority"... what exactly does this mean?
5. Can this form be filled out as an individual entity or do I need a DBA?
I know this is resurrecting an old thread, but I have been searching for hours for clear direction on these questions.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
1. Whomever you choose to be. Beneficiary - depends on how you do the transaction. Some make themselves or their company the bene while I perform the transaction a bit different, I name my wholesale buyer as the bene for a number of reasons. The grantor should be you.
2. Again, there are two ways of doing it, but when you "sell the trust" you are basically selling just that, the trust which owns/controls the property. When doing so, you are transfering beneficial interest in the trust which is a "change of ownership. The bene is the true owner of a trust. Adding someone as a trustee does not change who owns the trust so to "sell a trust" you must transfer beneficial interest and the new beneficiary will likely want to replace the trustee with a sustitution of trustee form.
3. You do not disolve the trust unless the property is sold or transfered out of the trust. Once it is (either way) you simply file the final tax return for that trust (each trust must have either an EIN number or social security number associated with it.
4. Not sure as I am not familiar with any standard "Illinois Land Trust" however, the signing authority of a trust in this context is the "Trustee"
5. A land trust is its own entity and a tax return must be filed for it for the EIN or SSN associated with it. It can be an existing EIN or you can file for a new one specific for the trust you want to form. You do not need a DBA.
Hope that helps, sorry for the delay, just saw your questions today.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
Richard, if you want to help others here on the board, then you may do so by answering their specific questions on this thread and in others. We are a group of invetors here you help each other by posting info for all the members to see.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
14y
What is to stop the wholesaler from creating two sets of identical trust documents and selling them to two different end-buyers, thus screwing one or both of them.
If nothing is filed with the state, how do the end-buyer know that he is the "real" owner of the trust, as opposed to someone else? And what's to stop someone from creating an identical set of documents and then claiming they own the trust (and therefore the property in the trust)?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
Great questions Jason. First off, the trust certification must have the name of the trustee, the name of the trust, tax identification number, the settlor of the trust, and the legal description of the property (usually an attached exhibit).
With that said, a buyer can simply check title to see that the trust on title matches the docs presented by the seller (wholesaler).
The info provided by another stating that "nothing is filed with the state" is incorrect, as the EIN number and the recorded grant deed are both filed with state/federal governments.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
14y
Thanks for the reply Will...still a little bit confused though (I can be dense sometimes :)...
Can you clarify what a "trust certification" is? Maybe that's the missing link for me?
If it's just a document that's not actually filed/registered anywhere, what's to stop someone from scanning it, using Photoshop to change the name of the Trustee/Beneficiary and pretending that the changed photocopy is the original?
I guess the fact that the EIN is registered could take care of that issue...is that the only thing that keeps that issue from coming up?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
Jason,
Fraud is very prevalent in our society today and as such, we need to look out for ourselves and one-another. With that in mid, you bring up some valid concerns, some of which I never thought of, but never needed to because I was always on the selling side of the land trust.
As to your questions, yes, the filing of the tax identification number which is associated with land trust would prevent someone from using some other phony one as it would not match the original filed trust certification.
The trust cert you are asking about is a one page document that is produced and provided to escrow (it is required) in order to close the sale transaction. If one were to try and make a second phony one with different info on it, it would not match what is on public record and once the first and real trust is executed, filed and sent into escrow, then it is the only one that would match and thus, the responsibility of escrow and title to make sure that others are not used concurrent or shortly after the real transaction takes place.
A title policy would insure any buyer of fraudulent transactions so that should also be used 100% of the time in dealing not only with land trusts, but any transfer of RE title.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
One other thing, fraud can happen to you no matter what kind of transaction, thus the land trust is irrelevant. Anyone can comit fraud against you in such a similar scenario by selling an entity or a real and trhen a phony grant deed (it has been done before) and there is where title insurance is so important.
If one were to wholesale the same property to two different buyers, they could do so using an entity and have concurrent, same day closings with two different escrow companies and with two different buyers, none of the parties being aware (aother than the persoan comiiting fraud) that two different transactions are taking place.
The only way to avoid the fraud is to make sure that proper due diligence is performed on the part of the escrow, title company and you as the buyer to verify that the documents being used in the transaction are original and real.