REI WEALTH MAGAZINE

Your Digital Guide to Real Estate Wealth

land trust

Behold the Cockroach – It has survived and thrived

by

By Randy Hughes, Mr. Land Trust

Starting in the late 1970s and up through the 1990s pitchmen were all over television extolling the ease at which you could “become rich in your spare time” if you just followed their real estate investment “program.” After 52 years in the real estate investment business, I know of no one who became rich through real estate quickly (I am sure some investors got rich quickly through luck, but I have never met one).

I do know a lot of people who became rich using real estate as their vehicle. They all earned it by working hard and putting in years of devotion.

This article for Realty 411 is for all of you who have not yet become a millionaire in your “spare time.”

article continues after advertisement

What does all this have to do with cockroaches?

When it comes to being able to survive and expand its operations, nothing has ever surpassed the lowly cockroach. Despite chemical warfare, I often find them in my houses after tenants vacate. Some tenants seem to cohabitate with cockroaches intentionally (and quite well)!

In New York’s Museum of Natural History, they used to point tourists’ attention to a pickled roach between the toes of their biggest dinosaur to demonstrate that roaches have survived in the same form since the period before dinosaurs stalked the Earth.

This means that cockroaches lived on even after the mass extinction of the dinosaurs. For perspective, man has been on Earth during only 1% of the time that cockroaches have existed on the planet!

How have cockroaches survived?

How have cockroaches survived so successfully for millions of years? 1). It never challenges anything bigger than itself 2). It stays out of sight 3). It can survive for lengthy periods under adverse conditions or in a hostile environment 4). It is fast and elusive 5). It lives in the cracks of society never calling attention to itself 6). It reproduces quickly and with ease 7). It can make a meal out of about anything organic regardless of how unappetizing!

article continues after advertisement

What can we learn from the cockroach lifestyle?

We small investors must be adaptable, maintain a low profile, and be prepared to move quickly when either an opportunity or danger presents itself. We must be able to recognize opportunities, whether foreclosures, rehabs, discounted paper, single-family house opportunities, or value-added property prospects. We must also avoid hostile environments (and hostile tenants) which are high on risk and low on rewards.

You can skip “make a meal out of about anything organic”. I don’t recommend that.

About those Pitchmen

I knew a real estate guru once that bragged that he bought a property every month. He later confessed that he felt so obligated to follow through with that public statement that he would buy bad deals just to “keep up his image” as a monthly property buyer.

Be patient, be diligent, analyze, and then act. Some investors never succeed because they catch the “paralysis of analysis” fever. They buy books (sometimes they even read those books they buy), attend meetings, talk with other investors, analyze data, buy mentor programs, and never buy any real estate.

I encourage you to learn more by going to my FREE online training at www.landtrustwebinar.com/411 and text the word “reasons” to 206-203-2005 for my free booklet, Reasons to Use a Land Trust. You can also reach me the old-fashioned way by calling me at 217-355-1281. (I actually answer my own phone, unlike most other businesses in America today!)

Apply these lessons from a cockroach lifestyle and you WILL succeed!

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

Multiple Properties in One Land Trust

by

Image from Pixabay

By Randy Hughes, Mr. Land Trust

Many investors think, “I’ll put multiple properties into one Land Trust! That should be easy.” They could assume that managing one trust will be a breeze compared to managing multiple Land Trusts. They may also think that there is no downside.

Investors who think like this have not thought their plan through. The reverse can be the case. Managing multiple properties in one Land Trust is a snap (especially when you use my exclusive Trust Tracker, included with my Basic Course). It’s having all your properties in one Land Trust, or one basket as I like to say, that things can get tough, very tough, fast.

Welcome to the New Year

Image from Pixabay

Before I continue, permit me to point out that I started writing about Trust Trusts twenty-two years ago. My students requested it. They wanted to learn more about the scores of benefits of using a trust to hold title to their properties.

When I speak in front of an audience or teach a Land Trusts Made Simple® class, the question of whether to hold multiple properties in one Land Trust is sure to come up. My basic answer is “you can hold multiple properties in one trust, but I do not suggest you do that.” Why not? Read on my fellow real estate investors.

Here’s Why Not

First, there is a basic principle to asset protection that says, “keep all assets separated.” This applies to all types of investments (cash, stocks, bonds, real estate, precious metals, etc.). The theory behind this is that if liability occurs against one of your assets, it will not directly affect all your other assets. For example, if you titled ten single-family rental houses in one LLC and you had an uninsured loss or legal claim against the property/owner, any lien or judgment against the owner/LLC would tie up ALL the properties inside the LLC. Dumb, huh?

Image from Pixabay

However, if you hold the title to each of those ten rental houses in separate Land Trusts and a contingency-fee attorney and their deadbeat client attack one of them, any potential judgment would be rendered against the property itself and there would be no effect on your nine other properties. Therefore, the smart real estate investor puts each property into its own separate Land Trust. I encourage investors to take asset protection a step further by making the Beneficiary of the trusts one or more LLCs.

Hunting Expedition

There’s another benefit to NOT putting multiple properties into one Land Trust. If a subpoena is issued to the Trustee in search of information about the trust and its assets, the subpoena would apply to ALL properties inside the trust (not just the property involved in the litigation)! Double dumb, huh?

Furthermore, any assignments of Beneficial Interest or contingent beneficiary provisions in your trust will apply to all properties held in that trust. This removes one of the best reasons to use a Land Trust. For example, if you wanted to sell one property on an installment contract, you could not do it effectively when holding more than one property in one trust.

It does not cost anything to form a trust. Therefore, it makes sense to always put each property into its own, separate trust.

I encourage you to learn more by going to my FREE online training at www.landtrustwebinar.com/411 and text the word “reasons” to 206-203-2005 for my free booklet, Reasons to Use a Land Trust. You can also reach me the old-fashioned way by calling me at 217-355-1281. (I actually answer my own phone, unlike most other businesses in America today!)

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.

Land Trust Record Keeping

by

Image by OpenClipart-Vectors from Pixabay

By Randy Hughes

All you need to create a Land Trust is two documents. A Deed to Trustee and a Trust Agreement. The heart of a Land Trust is the Trust Agreement (TA). So, what do you do when you can t find your TA?

Your first phone call should be to your Trustee. She/He/It should have a copy. But, sometimes things happen and even your Trustee can’t find a copy of your TA. Your frustration mounts when you can’t locate your TA because generally you went looking for it for a reason and you need it now!

Multiple USB sticks

Image by jacqueline macou from Pixabay

Why do you need your TA? Probably because you are getting ready to sell the property out of the Trust and you need to prove to a closing agent, title company or attorney that the Trust exists. Or, you need to make a change (amendment) to the TA (i.e. change of Beneficiary or change of Trustee). First, I would suggest that you learn your lesson so this never happens again. Make sure that you keep two copies of each TA in addition to the copy retained by the Trustee. Keep a hard copy in your property files filing cabinet and keep an electronic copy on a Memory Stick in your safe at home or in your safe deposit box at your bank.

Now, back to the problem. A Trust Agreement is not like a Will. By statute, Wills can be revoked by destroying it. Therefore, if no one can produce a valid Will upon the death of the testator, there is a presumption that the will was revoked. Not the case with a Land Trust Agreement. If a TA cannot be found there is no presumption that the agreement was revoked. If a photo copy cannot be found of the original TA, the Beneficiary can Restate the TA by typing up a new one! All the Beneficiary needs to do to recreate the TA is the put at the top of page one of the newly formed TA, Amended and Restated Trust Agreement. Then in the body of the TA attest to the fact that the original TA could not be found and that the Beneficiary is certifying that the is a true and accurate restatement of the original TA.

So, remember. Keep multiple copies of your TA (and any amendments) in different locations. But, if all else fails you know that you can always recreate the TA, if necessary.

Remember to like me on Facebook, join me on LinkedIn, and please leave me a Google Review!

Randy Hughes, Mr. Land Trust

I encourage you to learn more by going to my FREE online training at www.landtrustwebinar.com/411 and text “reasons” to 206-203-2005 for my free booklet, Reasons to Use a Land Trust. You can also reach me the old-fashioned way by calling me at 217-355-1281. (I actually answer my own phone unlike most other businesses in America today!)