Discussion Forum

ArizonaColin
Real Estate Investor

Re:Land Trust

Thursday, June 26 2008 05:11 PM

Craig,
Good to meet you.
It sounds like you have a sound investment strategy and i would consult with a well versed attorney specializing in estate planning and corporate structuring.

I work with land trusts as an investor and I setup them up for other investors and I can tell you typically you would not wish to have your company as the trustee due to the liability involved and in most cases this action can invalidate your trust or create what we call a "dry" trust. It is called a merger of title and if your company was the trustee and you were named a beneficiary or YOUR holding company wase assigned beneficial interest  I think you can see the reasoning on this. You would want an arm's length transaction w/o bias.


The IRS if they looked at your structuring they would not see a trust but a business trust or other entity and you would in effect lose all the benefits that title holding land trusts would have afforded you and of course you could have taxation issues to deal with..

For example is you company able to operate as a 503C charitable organization provides free collection service for the trusts beneficiaries..?? one example of the trustee reponsibilities..there are actually 102 legal items a trustee must adhere to so as to be a bonda fide trustee..

Please note there is no legal advice intended only my view or take on things.

The trustee just so you know holds both the legal and equitable title and is the owner.
In a beneficiary directed trust your company being a beneficiary directs the trustee via a power of direction to do whatever you need to do whether to get the property for sale or assign interest to another party etc..
All beneficiaries need to vote to the trustee on any actions taken on a given property.


You can name anybody as a trustee yet with these execeedingly high dollar amounts I would choose a corporate trustee that is bonded and insured and is a living corporation and as you mentioned out of state..

We use a corporate trustee ( EQuity Holding Corp www.equityholding.org)  even for short holds due to the superior service they provide and they know our investing system very well.
As to the financingg side it sounds like a good deal not knowing the numbers I'd be only guessing.
The question from an investor's viewpoint is are the 13 properties he is holding actually have the value that the seller claims..??
Alot of due dilligence to be done on a deal this big..

As to the leveraging aspect of using the corporation to to finance other project that sounds like a great strategy especially since you leveraged yourself nicely to acquire these corporaton's assets.. interesting stuff..

Craig,my email is coltrust07@gmail.com if you like to discuss your land trust strategy further in detail. I may like to hit you up on your strategies as well in developing my investing portfolio.

Good luck with that acquiston..

Warmly,
Colin Bochicchio
North American Realty Professional Member
cell:520-980-0598

REPLY

Randy Hughes
SFH Master Advisor

Re:Re:Re:Land Trust

Friday, July 11 2008 08:02 PM

Craig,

I GENERALLY AGREE WITH WHAT COLIN WROTE TO YOU. HOWEVER, THE TRUSTEE CAN BE A BENEFICIARY AS LONG AS THERE ARE OTHER CO-BENEFICIARIES. HE CANNOT BE A SOLE BENEFICIARY WITHOUT THE MERGING OF INTERESTS MENTIONED IN COLIN'S POST. HOWEVER, WE DO NOT EVER ADVISE PEOPLE TO DO THIS...EVEN ON A CO-BENEFICIARY BASIS. FOR A NUMBER OF REASONS INCLUDING PRIVACY OF OWNERSHIP.

REGARDING ALL YOUR OTHER QUESTIONS BELOW, WE ANSWER ALL YOUR QUESTIONS IN DETAIL IN OUR LAND TRUSTS MADE SIMPLE HOME STUDY COURSES AVAILABLE AT "SHOP ONLINE" ON THE SIDE BAR. WE INCLUDE INDIVIDUAL TRUSTEES THAT YOU CAN USE IN FLORIDA, VIRGINIA AND NEVADA.

PLEASE POST YOUR QUESTIONS HERE OFTEN. WE NEED YOUR INPUT

RANDY HUGHES

I am looking to purchase a corporation with asstes of 13 income properties. At my request all properties need to placed into seperate land trust for me to purchase the corporation. Can I place these properties with a trustee being my own Corp or should I make the trustee out of state? If out of state how can I find a trusted independent trustee?

These assets have a value of $1,346,000.00 with the current owner paying all my closing fees and providing a 8.50% cap on the interest for the purchase of his corporation. The properties have a good cash flow to support the corportion purchase at this interest rate.

I think this is good deal because all the properties are managed and I have 4 years of the books with all the numbers being verifable with receipts, no money is required down.

Question, because my corporation is purchasing his corportion this does not require a personal guarantee. Would this be considered a good deal as a buy and hold for cash flow or am I looking at this wrong. Owner is paying all closing cost and providing the finiancing at this rate.

My thinking is to use the assets of corporation to back other development projects.

Craig Warner
www.NY-IBuyHouses-Cash.com

Randy Hughes

REPLY