The Advantages of Using (selling investment properties) a Land Trust
No commentsBy Omar Johnson
A trust is one of the most potent tools available to the real estate investor. But if you’re like most people you only have a vague notion of what a trust is and how it is used.
A trust is a legal entity whose sole purpose is to hold assets. Trusts can hold any type of asset, including real estate. A land trust is a trust designed for the purpose of holding real estate.
So what makes a trust? There are different types of trusts, but all trusts have the following elements in common:
Beneficiary. The individual(s) who control the trust and its holdings. As the beneficiary of a land trust you have control of the property held in trust just as if you were the owner, and you are entitled to earn profits from the sale or rental of the property.
Trustee. The individual who actually owns the property in trust. The trustee is responsible for managing the assets held in trust, and distributing income according to the terms of the trust. The trustee owes a fiduciary duty to the beneficiaries and must carry out their instructions.
Trust Agreement. This outlines the terms of how the trust is to be managed and administered. It spells out the responsibilities of the beneficiaries and the trustee.
A land trust, then, is essentially a legal entity capable of holding real estate that is formed by a written agreement between two parties, the beneficiary and the trustee. The beneficiary controls the trust and the underlying property but does not have ownership. The trustee legally owns the property but must act according to the wishes of the beneficiary.
Perhaps you are asking yourself “Why on Earth would somebody use such an arrangement?” As it turns out there several advantages to controlling real estate without owning it. Here are a few.
Privacy of Ownership
The owner of record of a property held in trust is the trust itself. The trust agreement, which lists you as the beneficiary, is not made a matter of public record. Therefore holding a property in trust allows you to control the property without creating any public record listing you as the owner or associating you with the property in any way. This is a great thing if you don’t like lawsuits.
Publicly owning real estate makes you a fabulous target for them. Think about it, if you were an attorney being hired to sue someone, would you rather take on a legitimate case where the defendant is actually guilty of wrongdoing but has no assets, or a case where the defendant didn’t really do anything wrong but does have lots of assets? Believe it or not, just having publicly recorded assets makes you a more appealing target to predators and creditors of all sorts regardless of what you actually do. Holding a property in trust will also keep the price you buy it and sell it for off of public record, which can come in handy in certain situations.
Ease of Transfer
Transferring a property held in trust is much easier than transferring a property that you own. Beneficial interest in a trust is considered to be personal property, not real property. Therefore you can assign your beneficial interest in a trust to another party without a formal closing. The event is treated by the law as a transfer of personal property, not real estate.
Ease of control by Multiple Owners
If a property has multiple owners, those owners can place the property in a trust and assign themselves as beneficiaries. Then, only the trustee’s signature will be required to execute documents relating to the property, rather than that of each of the beneficiaries.
Given these benefits of using land trusts, hopefully you are excited to find out exactly how you can use them in your real estate business.
Omar Johnson is a successful real estate investor and entrepreneur who teaches and trains real estate investors how to create and operate land trusts from scratch in the specific state they do business in. For more information visit http://www.createalandtrust.com
Why Buying in a Down Market is the Way to Go
By Peter Vekselman
If there’s any doubt in your mind that Chicken Little is alive and well all you need to do is pick up a newspaper or turn on a newscast. Reporters nationwide are reporting the collapse of real estate prices and most are promoting the idea that real estate is the worst possible investment on the planet right now. Novice real estate investors take note: Reporters are usually behind the curve and if you get your investment advice from reporters you’ll get stuck behind the eight ball. Here’s the truth about today’s real estate market-and why now is the best time to buy.
A fundamental fact about real estate investing is that you’re in it to make money. Ideally, you want to make money at three stages of a transaction:
- When you buy
- When you hold
- When you sell
In order to make money you need to buy real estate as inexpensively as you can. The law of supply and demand says that when supply is up, demand falls-and so do prices. That’s where we’re at right now. You couldn’t lose money unless you were trying for quite awhile because prices were on a non-stop trip to the stratosphere. However, a perfect storm was brewing and when the real estate bubble popped it was felt all over the world. Investors and speculators who waited too long to get out of real estate were bombarded by the pieces as prices tumbled back down to Earth.
By investing as heavily as you can in residential real estate when prices are at or near the bottom you stand to turn a massive profit when it heads back up again.
The reason is because you’ll have a jump start on people who wait too long to get into the game. While they’re plotting and planning whether prices are going up, they’re losing profits. It’s nearly impossible to get in at exactly the right time. The best you can hope for is to be close.
Low prices give you an opportunity to buy more property than you could if it was more expensive. Some real estate investors are afraid to pull the trigger on a purchase because they’re afraid it might lose value before it appreciates. If you’re smart and you have a good cash flow analysis done before you decide to buy, it won’t matter if you lose money in the short term.
If you have positive cash flow, your property will be paying for itself on a month-to-month basis. What that means is that you have more coming in than you have going out. That’s a profit. So when your investment property turns around and begins appreciating again, you can ride the wave of appreciation as it builds equity and you become wealthier, while you continue to earn money each month off the income it produces.
Then, when you sell, you get the benefit of the price increase over what you paid for it. This is a true win-win-win situation for you as an investor. The key is having the wisdom to sell at the right time and remembering that real estate is cyclical. Making money is as simple as buying low and selling high.
Buying in a down market is the best possible time to buy. You get to be a three way winner if you follow good real estate investing sense by buying low, enjoying positive cash flow, and turning yet another profit when you sell.
Remember, by the time the news media catches wind of a trend, the trend is over. The news is for reporting what has already happened. They can’t see into the future and they’re only marginally qualified to report the past.
So buy low, invest well, and secure your future today!
Peter Vekselman has been successfully investing in real
estate since 1996. He has completed over 1000 real estate deals, owned a
construction company, been a private lender, and owned a property management
company. To learn more about Peter please visit
http://www.coachingbypeter.com.
4 Tips for Selling Provo Real Estate
By Art Gib
While many people often think that real estate guidelines only apply to buyers, there are also things that the seller needs to keep in mind in order to get the most out of their Provo real estate. If you are getting ready to sell your home, you need to do certain things so your real estate will sell as quickly as possible.
Walk into Your House like a Buyer
You are used to your home, and that means that you might not notice some quirks or problems. When you want to sell your home, walk into it as if you were a buyer. Look around and take everything in. Then, ask yourself a question. Is this a home I would buy?
Hide the Pet Things
If you want to sell your home, make sure to hide dog bowls and cat toys. Your home will sell faster if you do not look as if you have animals running around.
Also, make sure you clean up all of the pet hair. People want to feel as if they are moving into a new home, even when it has been occupied in the past. They do not want to think of people, let alone animals, living in the home they are thinking about purchasing.
Rent a Storage Unit
You want your house to look as roomy as possible. In order for that to happen, take some of your things to storage. Get rid of those winter clothes that are hiding in the back of your closet and clean out the storage area. When your home is crowded it looks small. That is not going to help your Provo real estate sell.
This will allow for people to get a better idea of the things they can do with the home. It will help your home sell quicker and it will also help you get prepared for the big move.
Every Day Might Be the Sale
Sometimes, buyers don’t make appointments. They just stop by to take a look around the property. That means that you have to treat every day as if that might be the day you meet your buyer. What does that mean? You need to keep your home in the condition to sell every single day.
If you follow these guidelines, you will be able to sell your Provo real estate much quicker. You have to create a situation where people can look at your home and see themselves in it. By following these guidelines, you will allow that to happen.
Art Gib is a freelance writer for PayneSmootGroup.com (http://www.paynesmootgroup.com), a website featuring Provo Homes.
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Thursday, September 25th, 2008 at 9:00 pm and is filed under realestate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
