Hi ALL,
Just wandered if anyone currently investing in the U.S has done so purchasing under a land trust agreement?
I learnt about this strategy on my last U.S trip and it can be a very powerful vehicle in increasing your property acquisitions quickly.
There are always risks involved by basically under this strategy you control the risk.
It is a totally legal avenue of acquiring property. Basically they are legal contracts written up by an Attorney being the actual land trust agreement itself and the property is acquired through the land trust.
Again I am new to this which is why I am wanting to see if anyone else has done it.
Basically they are done for people who are foreclosing on there homes. You buy the home off them by taking over the payments etc and the existing loan. The drawcard here is that you basically acquire all the equity in the property.
The deposit varies because you as the new owner basically “pays the arrears of what’s owning to the bank” being the payments the existing owner has missed.
I had an opportunity when I was there to pick up a brand new home in a good neighbourhood for $7k USD because that’s what the arrears was the owner hadn’t paid.
Under the land trust agreement, I would have legally purchased the home (title in my name etc) however the loan with the bank would have still been in the original owners name. I just take over the repayments. This way the bank “thinks they previous owners are back on track” I save them from getting a black credit rating and it cost me $7k to pick up a home with $30k equity in it.
I didn’t but this deal because I didn’t know enough about land trust agreements but have been researching it since them and it seems a good way to go as another vehicle.
I am about to purchase my first pre foreclosure now using this strategy so I will see how it goes.
Nothing ventured nothing gained I supposed. Luckily for me I am leveraging off the advice/help of my business partners over there which makes it a little easier.
Very new to me though and I am a little nervous about it so any advice/knowledge on this strategy I would be interested to hear.
Regards
Chad
Providing Turnkey Real Estate Investments In The USA.
We also provide Owner Finance in a new emerging market.E-mail:[email protected]
web: http://www.gr8realestateinvestments.comHello there Chad hope yr well man!!
Sounds like business is pumpin for U!
thats awesome !
I have been involved with a couple of subject to s and havent had any hassles yet!
There are a few whispers around though that u have to watch a couple of things. eg,the due on sale clause.this is in most mortgages over there and says that the bank can call in the loan when the property is sold at any time.So u basically have to keep in mind u may need to re fi the property within 4weeks if the bank calls in the loan.
Also make sure u put in the contract (and explain to the seller) that they will have difficulty getting another loan while the current loan is still in their name.(this can cause a prob for them trying to move on with their life so make it clear to them before doing the deal.If u r honest and upfront usually people will trust u on it.
Also another positive is u can claim the interest on the loan against the property (even though it is not in yr name)
Here is a search i did for u too with different stuff on the s-to deals.if it doesnt work go to houstoninvestorforum.com then type in search then subject-to
All the best guys
luke
Ps.Chad if u want to see how the paperwork works ill send u one of my contracts if u like for a look.Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Luke,
Thanks for you advice once again mate. Greatly appreciated.
The link you provided is also a great resource.
I will go through the process and see how it pans out and be sure I will keep you posted.Really glad to hear that your subject to 2 are also going well for you. Good work!
Again thanks the the usefull tips and advice.
Regards
Chad
Providing Turnkey Real Estate Investments In The USA.
We also provide Owner Finance in a new emerging market.E-mail:[email protected]
web: http://www.gr8realestateinvestments.comA landtrust is used by many investors as away to conceal the change in ownership. As Luke mentioned, anytime a property transfers title, the lender may trigger the “due on sales” clause. Calling the note due immediately may put the new owner in tight bind. This is not an illegal process, rather what some call a loophole.
Your probably familiar with the fact that many of the wholesale lenders that we use as mortgage brokers will not allow title to a property to be vested in the name of a LLC, only to idividuals. Many investors will take the chace that the if they later “quit claim” the property from their own name over to the LLC that the lender wont find out. Since the quit claim is a recorded document into the county of record, this could trigger the due on sales clause just as the other scenario.
Lenders will allow the title of the property to be vested in the name of a Land Trust (not for new purchases, only for existing loans). The lender must review the documents and see that the beneficiary of the Trust is the actual owner (shown as an idividual). Once the lender has reviewed these documents, the investor will later have the beneficiary assigned over to another entity, usually a LLC for asset protection purposes. This change in beneficiars in an unrecorded documents, meaning that there is virtually no way that the lender would see that a change had even been made.
The example above was how investors move title on their own properties using a land trust. What Chad is speaking about is very similar. Only instead this is a purchase in which a land trust is created for the current owner (seller). Remember, in order for it to be ok by his lender, the beneficiary first has to be set up as the individual owner’s (seller) name. Once ok’d be the lender the beneficiary can be reassigned to the new owner (buyer).
It’s the same process as sub2s only your putting the property in a land trust instead of just titling the property directly over. The transfer of ownership happens within the trust and is unseen.
Couple links.
Bill Gatten is said to have perfected the PacTrust. There’s also a discussion board on this site.
http://site.landtrust.net/aboutus.htmlJohn Reed thinks it to good to be true.
http://www.johntreed.com/Gattentrust.htmlYou’ll find that there’s case to be made on either side. Many for it and many against it.
Ben Carmona
Mortgage Planning Consultant
“Specializing In Investment Loans”
First National Mortgage Sources
314-914-6052 c
866-226-6309 f
On Skype at: Ben.Carmona-US.Investment.Loans
[email protected]
http://www.BenCarmona.comLending Nationwide Throughout the US
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