I wanted to know of the steps involved in forming a land trust to purchase properties. Am I suppose to form a land trust before I put the property under contract? Also will the seller OR end buyer know how much I profited from the deal?
And will I be able to assign the land trust just like a assignment of contract?
Come on! Shoot me a response! :banghead
I’ll help you out, I am not an expert nor claime to be. According to a national lecturer, I have heard that you don’t “form” it before you buy…you put your landtrust name as the purchaser on the purchase and sales agreement.(Here is where it is "formed). You use a new landtrust name for every property you buy. That way there is anonymity as to who owns it. Assign a trustee and you put your company name as the beneficiary.
Unfortunately, my hard money lender won’t close in a landtrust, only in the name of my LLC. I will have to record a landtrust with the town once I purchase the property in my LLC.
For flips and wholesales, save the hassle and close in your own name or your company’s name. Land trusts are for long term holdings like rental properties. You can use land trusts to get around seasoning requirements, but that’s a little to sketchy for my taste.
You can buy in a land trust. You cannot assign the land trust in the traditional sense, but you can transfer the ‘beneficial interest’ over to your assignee for a fee (your assignment fee). However if you go this route, your buyer will know how much profit you are making which is fine as long as your buyer doesn’t have a problem with you making a profit.
What I sometimes do is use my personal name on the purchase contract, and include a clause stating that I will be taking ownership in an LLC, S Corp, Corp, or Land Trust whose name I will provide closer to settlement. Then once I find my wholesale buyer, I inform the seller (or bank if it’s a short sale) that I will be buying it under the name [whatever the wholesale buyer’s company name is]. You then need to be paid out of closing. Of course your buyer will still know your fee, the only way around that is to have two separate closings.