- Hi, Clint Coons here at Anderson Business Advisors.
And in this video, we are going to discuss
buying real estate at auction.
All right, let's get started.
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Okay, so let's say you want to get into the auction game
and you want to go to the steps and you want to
go down there and bid with everybody else
and putting your hat into the ring
and buy those properties.
Well, definitely there's people that make money of that.
I have multiple clients that buy real estate at auction,
and they make a killing at that type of investing.
But the question is how do you take title
to those properties?
Because when you win a deal,
where are you going to take title?
It going to be in your name?
Is it going to be in a corporation,
is it going to be in a limited liability company?
Well, my philosophy is always this.
You want to be able to take title in a entity
that allows you the maximum flexibility.
So you can do something with it after the fact
without having to have another deed transfer.
So first off you have to figure out what your investing goal
is with these properties you're buying.
Is it you want to flip,
do you want to hold the properties longterm?
And then once you've got that down,
then you'll know where you want to put it.
But in order to do that, you have to set it up
the right way so that it's easily transferable.
So what I typically recommend,
if you're going to be an auction buyer,
you buy property in the name of a trust.
And a land trust is what I would use
when I'm buying properties at auction.
In fact, you create the trust right then and there.
Now if you're an Anderson client,
we've created land trusts for you,
and you've looked at our land trust,
and you say, wow, this is 40 pages long.
You mean to tell me I need to take 40 pages
with me down to the auction?
And if I want to possibly bid on seven properties,
well then I have to have seven different folders
of 40 pages each.
That's a lot of work. That's a lot to carry.
No, I get it. I wouldn't want to do that either.
So here's what I do. I tell people to set up a simple trust.
We have this one-page trust agreement
we use for auction buyers.
It's a simple little land trust.
Doesn't have everything you need in there
you should have in there.
We can fix that later.
So you go down there with this one-page trust agreement,
'cause in order to take title on the trust,
the trust has to be in existence.
You have this document and it's not even filled out yet.
You're bidding on a piece of property
and you win the auction.
Now, what name do you want to take title in?
Well, let's assume the address to the property
is Eighth and Main.
All right. It's Eighth and Main.
So I would call it the Eighth and Main trust
is what I would say.
I want to take title on Eighth and Main trust.
So if you want to take title on the Eighth and Main trust,
then what you're going to need to do
is set up your land trust right then and there.
So you got your trust agreement right here.
My land trust agreement, this one-page agreement.
What do we need to have in order to create this trust?
We have to have a grantor.
We to have a trustee because that name
is going to go on title, and we have to have
a beneficiary of this trust.
And we have to have the date.
The date's going to go on there as well.
So those are four pieces of information.
In addition to the name that you're able to come up with,
because you've gone down there prepared
to fill these things out.
In fact, I tell people many times,
pre-fill them out, just don't date them.
Don't sign them and don't put a name on there.
So in this particular trust, my grantor is going to be me
'cause I'm the one setting it up.
My trustee is going to be my Wyoming LLC.
Okay, because I do not want my name
associated with this property.
I want anonymity for it. So I'm gonna use my Wyoming, LLC.
The beneficiary is going to be me.
And the date is going to be the date
that I create the trust.
So here's what we do here.
If we're new, the Eighth and Main trust,
we'll call it Eighth and Main right up here.
Trustee's going to go in here.
Grantor's name's going to go here.
Beneficiary's name's going to go here.
Date's going to go up there.
And then I'm going to sign it down here as the beneficiary.
And I'm going to sign it down here as the trustee,
and then title would be issued to this land trust.
This one-page document's all we needed to create the trust.
Now I've created a title-holding vehicle.
So it's held in this trust name.
It's a title-holding vehicle, which means this.
My trust allows me to assign my beneficial interest.
And so this is where the creativity comes in
that gives you the flexibility.
Let's assume that I want to hold the property.
It's going to be a rental property.
Well then I will go out and create an LLC over here.
If you watch my other video
about how to name your land trust,
I'm going to call this one the Eighth and Main LLC,
because it's going to match the same name as my trust.
And then I'm going to assign my trust
over to this limited liability company.
So that's what I'm going to do to get that property,
that trust held in that LLC.
Step number two, remember this one-page trust agreement.
That's crap. We're not going to stick with that.
We can't stick with that.
We need to get a better, stronger trust agreement
for ourselves.
So we then turn around and I restate it.
I restate the trust.
And what I mean by restating, you just create a new trust
with all the same information, but all the provisions
you wanted in that 40-page agreement with the restatement.
So now you got the better protections
that come from a land trust.
So you move away from this,
with the restated trust held by your LLC.
Now, if you want to flip the property,
well, we're not flipping in that LLC.
That's the buy and hold structure.
If I'm flipping, then I'm going to move it over here
to a separate LLC, my flip LLC,
that should be owned by my corp right over here.
So it's going to go here and again,
I'll do the exact same process, restate the trust.
So when you're buying at auction,
what I would suggest you do is get
this one-page trust agreement,
go to auction with a whole stack of them
and then make sure you have your Wyoming LLC set up.
The agreement is prefilled out.
The only thing you haven't put in there is a trust name,
the date and signed it.
And then if you obtain the property,
you win the property complete the process, fill it out,
take title in that name and then move it
to the appropriate entity.
Benefit is, no deeds have to be filed.
The only deed that gets recorded
is into the name of your trust.
And nobody knows where that trust goes from then on
because nothing shows up on the public record.
The only thing that'll show up as it went
from the auction to your trust,
and that's not tied to you because we have
our Wyoming LLC serving as our blocker trustee,
to keep our information private.
There's a lot of other ways you can do this as well.
Sometimes when you're going to auction,
they may not allow you to use trust.
If you have to close in a business entity,
then I would set up an LLC and I'd try
to close in the limited liability company,
maybe go down there, have a couple LLC's set up,
so if you get two or three properties,
you have two or three different LLC names available
that you've set up already
so you can close directly in those LLCs.
Other ways we've done this before
is if you live in a state that recognizes the series LLC,
then close in the name of a cell instead.
But the land trust, what I have found
is the quickest, easiest way for people who buy at auction
to take title, not have their name appear
and give them maximum flexibility.
Hey guys, if you liked the video,
make sure you hit me up on the likes, got any comments,
put those comments below, be sure to respond to them.
And I wish you all the very best
with your real estate investing.
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