Hey what's up guys, It's Clint Coons here.
And in this video, I'm going to explain to you what a land
trust is and how it can actually help you with your investing.
All right. Let's get started.
Okay.
So what is a land trust if you're not familiar?
You haven't watched my other videos on land trusts.
Glad you're here.
You're clicked on this video
because I'm going to explain to you what a land trust is,
and then I'm going to talk about how it can help you with your investing.
So a land trust, all right. Is
is basically
a revocable trust agreement like a living trust.
A land trust is comprised of three parties.
All right.
You have a trustee.
Trustee.
You're all probably familiar what a trustee is.
And now I'm going to challenge you. It doesn't have to be an individual.
It can also be an entity.
I have a video. We'll put that in the show.
Links if you want to know just about trustees for land trust.
I've got a great video on that that talks about using Wyoming LLC as a trustee.
But the fact of the matter
is, in any type of trust agreement, you need to have a trustee.
You also need to have a beneficiary.
Okay, so land trust is comprised of a trustee
and a beneficiary, and you have up here what's called a grand tour.
That is the person that that creates the trust.
So to create a land trust
is you got to have three parties here
in that trust agreement that have come together.
And now this could be the same person.
I wouldn't always recommend that, but it could be you here, you here,
and you here.
So when we create this, what we're doing
is we're basically setting up a legally recognized vehicle.
Okay? I'm going to refer to as a vehicle
that can hold title to property, hence the word land trust.
So it's a title holding trust is is what what a land trust is.
All right.
So when you're thinking about this, just think about it as title holding,
meaning that it can hold title to your real estate like this.
So would a land trust has been used for years, and I'm taking a long,
long time to hold title to real estate to get it out of an individual's name.
Because we realize there are some issues that come up
with holding real estate, especially from an asset protection standpoint.
You know, people know that you're on title, they follow the judgment
against you would stick to your property if the property is held in your name.
So by putting your property into a trust, your removing it from your name
and you're then essentially making that asset,
if properly structured, immune to potential judgments
that are recorded against you in the county in which you live.
So the trust itself is just a an agreement, right?
It's something written up. It's not recorded anywhere.
And so the terms of this agreement, this land trust agreement,
become like a contract that you're enter into to buy a piece of property
from someone or to sell them some product.
You specify the terms of that contract.
Under what terms will I buy it?
Under what terms can you return that that item
and you list all those things out inside of that contract.
What's the same way with a trust?
A trust is a contract.
You specify how much control we want to provide the trustee,
how much control we're going to give the beneficiaries, what rights
they have with respect to the trust assets.
And so you can delineate all this in the agreement
when the when the assets will be sold and how those funds would be distributed.
All that gets put together in that land trust agreement.
And the thing about the trust document itself
is that when you build this trust out, it's completely private,
meaning that this document, unlike a limited liability company
where you have to go to the secretary of state and pay a fee to record it,
you don't have to do that with the land trust.
It's completely private document.
No one knows about its existence other than if they looked at title
to a piece of property and they saw that it was held in a trust name
that would then clue them in that there is a trust.
They don't even know that it's a land trust that's holding title
to that particular property, but they don't know the terms under which
that title is held because that trust agreement isn't recorded anywhere.
So a land trust is a great tool, especially for beginning investors
who are just getting started in real estate
to take title to real estate to keep it out of their name.
Because by putting property in your name, there's, you know, issues
that come up with that from an asset protection and liable standpoint.
And so whatever we can do to make sure that we're minimizing where
my name appears on title, the better off you're going to be should something happen
such as a lawsuit with your tenants or with you individually,
because maybe you entered into a lease agreement on an office space
and you walked away from it
and somebody comes after you, they obtain a judgment against you.
So it's a great tool to to hold title to real estate.
That is how it's used predominantly in the US for for real estate.
Now what are some of the benefits.
Why would you want to set up a land trust and how would we use it.
Well, number one, why would I want to use a land trust?
Because I don't want to hold title my name like I've been talking about.
So that's the first reason why I don't.
So how do I do that?
Will I have to come up with a a trustee? That's not me.
That's why if you watch my trustee video, I talk about using
possibly a limited liability company as your trustee.
And so that that way it gives you anonymity
so that if I took title that was once in my name that had Clint listed on it
and I transferred into this trust and I called this trust, the
Funky Charley Trust
with Blue Box LLC as its trustee.
Now, if somebody looks
at title to this property, they're no longer going to see my name.
They're going to see the trustees name and the name of the trust on title.
So now I've just provided myself anonymity.
So that's a compelling reason to set one of these up.
Another compelling reason
why people like to use land trust is this beneficiary aspect down here.
So with the land trust, when you become the beneficiary,
what makes it unique, say, compared to a living trust
is that you can transfer this ownership while you're alive.
Maybe you want to put your beneficial interest into a limited
liability company down here for asset protection purposes.
So you take the beneficial interest and you just assign it over to your LLC,
you just transfer it.
It's one piece of paper, that's it.
So you're no longer the owner of your trust here.
Now your LLC
becomes the owner of the trust and you own the limited liability company.
Now be very generic here in the way I'm drawing this out,
meaning that many times we'll have a Wyoming LLC down here.
So in the comments, if you say, well, what about the Wyoming LLC?
You've mentioned that many times in your videos. I get it.
But I just I'm not flushing all that out.
I'm just kind of showing you truly why we would use this. Now,
this property here that's held in the trust, when I take the trust
and I assign my beneficial interest to this LLC over here,
the beauty of having the land trust white people use it is because that assignment,
that transfer of beneficial interest, that's not recorded anywhere.
So no one knows if they look at title
about this trust since they can't see the trust document.
Who actually owns a trust?
Was it Clint?
Is it a limited liability company?
Is it a third party?
So the ability to transfer title
to real estate via this trust document
makes it extremely attractive to a lot of real estate investors.
You know, I was recently on I was being interviewed by our Ari simply.
I've actually interviewed Sherrod as well on my channel.
You can check out his video, great product when it comes to managing
your your real estate investing investments.
Well, we were talking about using a land trust.
He uses many in his videos for his own investing.
And I mentioned to him something that he'd never heard of before.
I said, hey,
another benefit using the land trust and why people want to use it
is if you're flipping real estate to investors, let's say that
you buy property and a lot of times people maybe buy it at auction
and then you flip that property to an investor.
Okay, so if you're flipping property to investors, the land
trust can really help you. Let me show you what I mean by that.
So if I take title to my my real estate
inside of a limit or inside of a land trust.
All right, this is a clean my board now.
Things are going crazy here.
So if I take title inside of a land trust like this
for that property and then I find an investor
over here that I'm going to flip this property to.
Right.
And that investor is going to do the rehab work on the property.
Well, by having a land trust, I'll transfer this investor
my actual land trust.
So I'll sell them the land trust that holds a property
rather than transfer them the property directly.
Now, if you're watching me going, why does that matter?
Well, check this out.
So when this investor rehabs this property here
and then sells it to these first time homebuyers
that want to treat that as their personal residence,
many times they're going to qualify under VA or Freddie
or Fannie financing, depending on what they are.
And there are seasoning requirements for that property.
That is, if that property had been flipped.
So so I originally buy it from this party up here.
They sell it to me, then I sell it to them.
They want to sell it to them.
If they haven't seen that the property has been held by the same owner
for at least six months, these people can't qualify for financing.
So if you want to make sure that you can ensure that your
buyers to your properties can qualify for financing
if they're first time homeowners or they're qualifying or some special
Freddie Fannie loans, which typically have a seasoning requirement.
And the land trust is the way to go because once you take title
and the land trust, then as long as title still held theirs,
if it's held for six months between this me selling to this investor and him doing
the rehab work while held in the trust and he sells it to them.
You will meet those seasoning requirements so so that's one of the main reasons
why I think land trusts are extremely effective for people,
investors who are flipping property using this type of document.
Or if you're going to wholesale property, putting it together in a land trust
or wholesale trust so that you got the property tied up under contract.
You know, I've done this a lot with HUD.
You tied up under contract
in the trust name and then you kicked the trust over to the investor.
So now the seller cannot object
to closing because they agreed to sell it to the trust.
They weren't agreeing to sell it to the beneficiaries.
If you want to move properties around between your entities, let's say
I have some LLC set up here.
I've got to LLC and I had
I made a mistake and I put two land trust in one LLC.
Now I decide I want to reduce my liability exposure, so I create a third LLC.
Well, all I have to do is assign the interest over here
to transfer it out of LLC number two over here to LLC.
Number one.
And no one's going to know about that, whereas a lot of times what will happen.
People own property directly in the LLC.
Right?
And then to get that property over here,
they have to deed the property out to themselves.
So they did it out to themselves and then they did it up
into the limited liability company.
So they have two recordings.
So, so the ease of property movement is a great feature of using the land trust.
Listen, if you've not used the land trusts before you,
you're not sure if it can benefit you.
I guarantee you it can do wonders for your investing.
I've been using it for 20 years
with my own real estate investing and our clients have been using them as well.
You want to learn more about land trusts?
Well, come to my one day Tax and Asset Protection Workshop.
I got a link below in the show notes.
We'll take you there. It's completely free.
I'll be teaching
about how to set this tool up and how can benefit
not only protecting your residential real estate.
I'll show you
how a little change to this trust can also protect your personal residence.
Thanks, guys.