LLC or Land Trust for Buying "Subject To" Real Estate
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- Опубликовано: 15 фев 2021
- In this video, I want discuss about a question I often receive which is how do you buy property, subject to and make sure you're protected?
There's always going to be some risk when it comes to investing subject to deals real estate. Your greatest risk is going to always be the lender if they accelerate, but watch this video as your guide moving forward.
Questions or requests for a video topic are always welcome!
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Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#SubjectToInvesting
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I just subscribed, another great video, love this one. Totally understandable, short length making it easy to digest important tips for Subject to real estate investing. Thanks so much.
Thanks for the sub!
One of the most equitable sources of info online. Keep up the great work!
Wow, thanks!
Fabulous, thank you for an insightful and clearly explained video!
Glad it was helpful!
Thanks for that information that was a question that I didn’t have the answer for until watching this video
Glad I could help
We love the sub2/land trust combo. Great privacy!
Awesome.
Very insightful and informative. I need more information about how much do I pay the seller?
Some people advise contacting the bank and working out a subject to deal instead of trying to run around them since the chance of acceleration of the due on clause is low.
Great video!!
Thanks for the visit
As usual, great video without the fluff! Clint, now that rates have gone up what do you think the odds are of the lender finding out and enforcing the due on sale clause? It's hard for me to imagine a lender not doing anything on a 3% loan.
Low. Been through this before and lenders rarely exercise this clause. I have only seen it happen twice and in both instances the borrower was not making payments.
How do I Sell a sub 2 after I have it for a while?
@Clint, can you still take depreciation using the land trust if your LLC doesn't directly take title as the investor?
Yes it flows to you personally.
So much VALUE! 🎯Question: How would the seller vet the buyer on a blind fate ( without a credit report, credit score checking, etc.)How can the seller make sure the buyer can make the payments?
Great points and this is a risk for the seller. Buyers have been known to walk away from bad deals and the seller falls back into delinquent status. That being stated, the seller is typically in a distressed financial situation and the risk a buyer poses versus a bank foreclosure is weighed into the decision making process.
Thank you for another great educational video!
I have been struggling with a question... what is the actual advantage of using a Land trust over a simple revocable trust?
My understanding is that a Land trust is a specific kind of revocable trust. So a revocable trust is a superset of the land trust and should be able to do everything a Land trust can.
Yes, exactly
@@ClintCoons Thank you for your reply. Is there any advantage of using a land trust over a simple revocable trust?
@@mytunes2922 Yes. The land trust is for holding real estate anonymously and less about estate planning. The typical revocable trust is set up to pass on your estate free of probate.
@@ClintCoons Thanks again for your reply. I apologize for messing up my own question. Since a simple revocable trust can hold real estate and other assets, why not use it instead of a land trust? What can a land trust do/offer that a simple revocable trust cant?
@@mytunes2922 A land trust is a title holding vehicle that allows for the assignment of ownership. For example, if you place a property into a land trust you can assign the ownership interest to an LLC for asset protection. A living trust does not offer this ability. Check out this playlist on my channel for other benefits- ruclips.net/p/PL3FUah8ohZLypd0vPVGxdMBJFNssFM8Z9
Whats the purpose of the seasoning period you mentioned at the end? Is this specifically pertinent if they were late/behind on their mortgage when you took it over? I would imagine if they were current, a seasoning period wouldnt be required since there is no reason for them to audit the file?
Correct
Memorandum of contract also I'd a great insurance
What are your thoughts of setting up an llc using the name of the seller for the name of your llc specific for that property. The seller would not be a member of the llc. Even if the bank is alerted to the transaction, seeing the sellers name as the llc may alleviate any chance of the bank looking further into it.
I think it might cause the seller pause. The seller might wonder if you are trying to steal his identity.
Thank you for explaining the subject to process. My question is what is the process if you want to sell the property before paying it off or if you’re finish paying off the mortgage and want to remove the original lien holder from the equation? And what about tax benefits throughout the years you are paying the mortgage? Do you just forfeit that?
If you sell the property the original line holder will get paid at closing. If you have paid off the lien holder then they have no interest in the property. If you are paying the mortgage you take the deduction.
@@ClintCoons thanks for clarify Clint. You just helped me immensely!
How would you sell it before mortgage is paid off? Would it be on a wrap, or can you do traditional method of selling on mls?
So even if I live in CA, the trustee should still be a WY LLC? Not a CA LLC? Or is it best to take title in a land trust-->a WY LLC (trustee) -->and CA LLC (beneficiary)? Thanks for great content you’ve shared ❤
Depends on the activity of the trustee. If the trustee is working with tenants then it should be CA but if its passive then I would opt for WY.
How would you go about doing subject to on Multifamily? Existing loan is 5 year term then re assessment. Seller may pass during term from health reasons
Try and purchase and assume the loan. Be careful if you plan to use creative financing if the person has failing health. This might create problems in the future.
@@ClintCoons would it be a good idea to just do an agreement of sale Executory contract? They stay on deed?
@@kamronengler That could work but I would be concerned about the beneficiaries who might assert you do not own the property or will not honor the contact.
So the seller will have a hard time getting another mortgage and will need to rent now right? Since the first mortgage remains on their credit file?
Correct. This should be disclosed to the seller when engaging in the transaction.
What if its an owner finance and there is not bank loan involved. How would you acquire the property via Subject to?
You wouldn't. This would be a straight purchase in an LLC.
Your video came in just in time as I am looking to buy a subto deal myself! Would you please explain what would happen to the subto property if seller died after escrow closed, and my name is already in the deed.
Assuming if someway, somehow lender found out about the death. Thank you so much Clint! Where can I create a land trust? Are you in CA?
If the lender is notified by the beneficiaries of the estate you will most likely need to refinance the property.
We have offices in WA, NV, UT, and WY but we work in all 50 states.
Why not throw a 2nd or 3rd place lean on the property under the original owner's name making them sign it for the amount you'll pay current, plus the money's you gave them, the first 12 months of PITI plus a bit of profit for your trouble if things don't work out, and closing costs under your LLC so if they try to sell it they have to pay you off before title can be cleared? It could all be a part of the closing
Ok but what type of encumberance would you file?
@@ClintCoons Wouldn't a 2nd trust deed 1) somewhat protect your initial investment, and 2) keep the seller from pulling out equity at a later time?
@@soelost1313 Yes you could do that or file a memorandum of interest.
But I thought the idea was to use this without coming out of your pocket. If you’re just starting how in the world will you pay the mortgage, pay the back taxes and give the buyer some money? That’s crazy
Not all deals happen this way. Some you are able to take over without any money out of pocket.
So you basically just make the original buyer debt free with a little bit of money to claim the house to rent it to other people??
Not necessarily because the original mortgage will stay in place.
Subject 2 RISKS ARE : Some of the risks include the lender calling the note due when they find out about the deal. If the lender is not willing to work with you, then you will have to refinance or have the property repossessed. This can subject you to fines from the seller as well as from the lender and any tenants you have in the property.
What is a Wyoming LLC?
It is just an LLC set up in WY. WY provides anonymity for LLC I.e., your information is not listed with the secretary of state. Using the WY LLC you are able to maintain privacy over your other entities if it is set up as the member manager of state specific LLC or trustee of land trusts.
Analyzing this and also the DST vs 1031 for sale prep options. Tampa, if anyone has recommendations for an excellent real estate attorney. Thank you!
The subto property i am buying is in Oklahoma..i have a holding company Wyoming LL) that ownes 4 other llc ... consultanting company Wyoming llc
A buy and hold Texas LLC, fix and flip Texas LLC.. National Airbnb management company Wyoming LLC
Which llc do i use for the beneficiary.
They're going to make me my personal name a trustee and asking for my LLC as a beneficiary.... Here is the email from the title/ escrow company that i am working with.
"This transaction the deed will actually be held in the name of the Trust, which is the property address of the home,(******** Ave Trust) not in your personal name. If you have an LLC that you will running expenses, revenue, filing appropriate taxes etc., that is best to list as the beneficiary of the Trust. We will set the trust up with you as the Trustee and your LLC as the beneficiary. The only spot the LLC is listed as a beneficiary is on the Land Trust Agreement, and only you and the settlor of the Trust see that document"
Ohh yeah..I live in California
What title company is instructing you on how to set up this deal?
What if I filed a lien on the property to prevent the trustee from selling? Then removed the lien once the WY LLC was named as replacement trustee?
Yes you could file a memorandum of interest but I would not remove it once the trustee switches unless you record a trustee deed to update title to reflect your LLC as the trustee.
On a sub2 are transfer stamps paid?
Yes