- Hey guys, Clint Coons here.
And in this video,
I wanna take a new look at using land trust
for investing in real estate.
Okay, let's get started.
(upbeat music)
All right, so here's the deal.
If you watched the video
that I cut on the do on sale clause,
or you saw that other video
I did with the attorney from Texas
who works with underwriters to put loans together,
one of the things really struck me
about the use of land trust
and how they might be utilized now
from a different standpoint.
And many times you've heard me talk about it,
you've heard a lot of people talk about using land trust
for that due on sale clause.
And as I showed you my due on sale clause video,
that, you know, Freddie Fannie conforming loans
which 90% of them are out there, it's not an issue, right?
If you take title to property
that's an investment property,
you got an investment loan on a conventional loan on it,
you can move it into an LLC and they won't accelerate.
So that idea of using a land trust
to get around the acceleration clause,
not so much of a problem.
Now, maybe there may be still limited uses
that you could see
if you're concerned about buying
possibly a subject two deal
or something like that,
where you think that trust
would probably offer a little more protection
and I don't know if it would.
I mean an LLC since it's permitted to transfer it in,
maybe an LLC is the better way to go
if you have an anonymity compliance structure.
In fact, there's an idea for another video.
But here's what I'm thinking.
So, as I was talking to Andy, something struck me.
One of the things that we do know
with limited liability companies
and Freddy Fannie conforming loans is that,
you can deed the property in,
but if you want to refi, what do you need to do?
You need to take it out.
So here's what can happen.
You build a structure like this.
We create LLCs here,
okay, we got some LLC set up, let's just do three.
And you've worked really hard
to create this structure that provides anonymity for you.
So here's your Wyoming, LLC down here,
and each of these LLCs are owned by the Wyoming LLC.
Okay, I've covered this hundreds of times.
Now, when I've got a property in this LLC right here,
LLC number one, all right,
LLC number one has this house
and I want to do a refi on it.
What do I have to do?
I need to pull that property out and put it in my own name
because it's gonna be a Freddie Fannie conforming loan.
If I'm not working with a portfolio lender,
they're not gonna allow me to refi this property
in that limited liability company.
I mean, check out the above videos I've cut
where I discussed this issue.
So you have to pull it out.
Now, what do you see there?
You see that it was held in an LLC
that your name wasn't attached to, all right?
And then it comes out of that LLC to your individual name,
got it, remember in one of my videos
I talk about anonymity,
how to blow your anonymity with LLCs,
how you can screw it up.
So here we go, we get a property transferred out
into your own name,
and then you turn around after the refi is complete,
and you put it back into that LLC.
So if someone was looking,
you would see is that you originally bought the property
because you did a standard Freddie Fannie conforming loan,
so it was in your name.
So it went from you,
the LLC that doesn't have your name attached to it.
So someone could possibly assume you still own it,
but you really don't know that
because you're not on that LLC.
And then it went from this LLC to you
and then you back to the LLC.
All right.
So there are plenty of people out there
that if they saw that,
I mean, I know I'd look at and go,
"The hell, I know what's up.
Guy has a structure.
He's working with Anderson
and they put together an anonymity plan him."
So this is the take on the land trust
that I hadn't considered before,
that I want you to think about.
So one of the things that I've always thought of
when I'm putting my structures together
is to use the kiss principle.
And you may look at some of my drawings
and go, "Clint you don't even know what a kiss is."
But, believe me, I do try to adopt that.
I mean, there has to be a real reason
why putting enemy together,
you have to say, well, you justify its existence.
What is it going to do for me?
Now putting property into these LLCs,
if you're just trying to avoid the due on sale clause,
that is not an issue,
that to me isn't a big enough reason to use a land trust.
I like to use land trust in my own investing
wherever there's an issue with property transfers.
If I can't go directly in the LLC,
and they're gonna tax me on it,
then I'll use the land trust in those situations.
But now this brings up a new strategy.
So if I know that I'm using the bar strategy
or I'm gonna wanna refi this property in the future
and I wanna maintain that anonymity,
I don't wanna have to dismantle it and file multiple deeds,
then here's what you should consider doing.
Set up structure,
but include a land trust with each LLC, like this.
So the land trust is owned 100% by the LLC,
it's like that.
This is my land trust.
Now on that initial transfer,
rather than put it directly into the LLC like I did here,
instead I would put it into my land trust, just like this,
drop it into the land trust.
And so now it's held in the trust.
So when you go to refi the property,
and what's gonna happen is,
you're gonna attempt to do the refi
directly in the trust name.
Now you're not gonna have to pull it out,
so property won't be transferred out,
so there won't be a recording
of the fact that property went in
and came back out to you personally,
you're gonna be doing it directly
through that trust name itself.
So you keep that anonymity shield intact.
And people aren't gonna know
that you have all these business entities
and be able to track down your other properties.
Maybe they can see the one, all right?
Some reason maybe this gives it away some way somehow
but they're not gonna be able to tie all back together.
So thinking about that way,
this is how you may wanna consider using the land trust.
Consider putting the land trust in your structure
to keep that that all tight
without seeing multiple property transfers.
Now, here's the thing.
This is important.
If you're going to do this strategy
and I'm thinking, you know, reconsider it for myself
for some of those properties
that I've been acquiring that are residential,
that I get loans on
rather than going directly in the LLC using this,
when you're ready to refi property,
there's an important step here,
unless you're in Florida or Illinois.
You're gonna need to take this trust
and you need to restate the trust,
restate the trust as a living trust, okay?
What does that mean?
I've done this many times for people,
where I take their land trust
'cause I know what the lender is gonna do.
The attorney's gonna, just like Andy,
they're gonna look at the trust,
it's a land trust,
"I Don't understand it, won't do it."
But if it's a living trust,
something that is adopted in all 50 states,
recognized by all 50 states.
And that's not to apply land trusts aren't recognized,
they're just not recognized by statute,
the living trust is more common,
that's a better way to describe it.
So they've seen that before,
in that instance then with the living trust,
if this comes to their desk,
and you've restated it to look like a living trust,
which means you draft a new operating,
a new trust agreement that reads just like a living trust.
I have a short form that I like to use,
it's about 15 to 20 pages long.
And we send that to the lender.
First, we try to send them a certification.
If they accept a certification
which is another important document you should have,
and all the certification
is it gives them all the information,
who is the trustee?
Who are the beneficiaries?
Who is the grantor of the trust?
And you send that in.
They won't accept that,
they want to see a copy of the trust.
And you send them a trust that looks like a living trust,
so they can then use that for lending purposes.
Now you're able to do the refi in the trust name.
Once that's done, then you need to go back
and restate trust again, back to a land trust.
And if you're scratching your head
wondering how does this take place?
Well, the beauty of trust
is that trust can be restated at any time.
When I say restated,
what it means legally is that,
you can change the entire trust
to anything you want it to be.
This is not an irrevocable trust,
they can be changed at all times.
They can go land trust, living trust,
a living trust, land trust, land trust,
who knows what trust
as long as it's not irrevocable trust,
you've got a ton of flexibility there.
So by these changes,
you can keep a structure in place
where you're not having to pull a property out
and do the refis in the name of it.
I thought it was interesting concept
after talking to Andy and I wanted to share this with you.
If you haven't seen that video, definitely check that out,
I'll put a link to it at the end of this video,
it'll be popping up right now
to go back and listen to my interview of him.
But it's a strategy,
you may wanna consider it when it comes to taking title
to your investments in the future.
Take care everyone.
(upbeat music)