Question about forming a land trust

General Real Estate Investing
1

Once a trust is formed,can I claim these properties as assets when qualifying for a mortgage?

Thanks,
Kevin

2

Hi Kevin,

Yes. When you apply for a new loan, you list their value under stocks and bonds as your trust ownership is personal property. If you have the property under a triple net lease, your Trustee will send your new lender a letter which shows that you have no responsibility for maintenance and repairs and little chance for a vacancy. Your debt-to-income ratio will not be dinged.

What I often do is carry my equity (the difference between the MAV with the seller and the MAV with the tenant) in the form of an interest-only note with my tenant, secured by his beneficial interest in the trust. I then register it with the UCC and it becomes a security.

Good luck.

Da Wiz

3

Thanks,I appreciate the info.

Kevin