hey it’s Mike Hamburg with flipping er comm welcome back for another exciting expert interview Ryan review successful real estate investing experts and entrepreneurs in our industry to help you learn and grow by the way if you happen to be looking for off market wholesale deals we have hundreds of them on filter comm right now and you can get a count for free in about 30 seconds so go to filter calm if you’re not already a member today I’m joined by Randy Hughes he’s known as mr. lay entrust every Andy’s been a full time real estate investor for over 45 years and a lot of veteran real estate investors over time as it passes as you mature in your life as you get closer to retirement as you build up your rental portfolio and things like that you start to think a lot more about privacy and asset protection as you work hard to build up what you’ve built and you don’t want that to get taken away from you somehow and you really don’t people bothering you there’s a big element of privacy that you can benefit from with land trusts so today we’re going to talk about Randy’s area of expertise which is land Trust’s in an episode we’re gonna call land trust made simple it’s a great tool to help protect what you’ve worked so hard for before we get started with Randy today let’s take a moment to recognize our featured sponsors realty mogul comm is an online marketplace for real estate investing connecting borrowers and capital from accredited and institutional investors get a rehab loan fast and close in as little as 10 days with rates starting as low as 9% for more information call eight eight eight two nine six one six nine seven be to our finance makes loans tailored specifically for rental investors they can help you unlock equity from existing property so you can get cash to grow your rental portfolio that’s huge and it opens up lots of opportunities previously not available to rental investors me alone call eight five five eight one nine four four one two or visit b to our finance calm today national real estate assurance group is the nation’s leading provider of insurance to the residential real estate investor market from individual properties to large-scale investors national real estate insurance group is ready to serve you we’d also like to thank crest our funding mid-atlantic IRA and renter’s warehouse please note the views and opinions expressed by the individuals in this program did not necessarily reflect those of flipping or calm or any of its partners advertisers or affiliates please consult professionals before making any investment or tax decisions as real estate investing can be risky hey Randy welcome to the show thanks Mike I’m happy to be here yeah yeah glad to have you back you were on a little over a year ago and we talked about land trust a little bit then as well and I know you’ve got a story to share with us too if something that actually happened since then that actually protected you from potentially massive losses so we’ll get back to that in a second but before we get started for those that aren’t familiar with you maybe you could introduce yourself and then just talk at a real high level about the kind of importance of land trust and why you started using them yourself okay well I I started buying houses single-family houses as an investment vehicle when I was in college I was 19 years old when I bought my first house and continued buying houses after graduation and and pretty much have been a house guy at all this last forty five years I have invested in apartment buildings and shopping centers and commercial buildings you know like restaurant buildings and that sort of thing but over the years I realized that the single-family house is fits my personality the best and and I got the the the best rate of renewals and what I mean by that is when I owned apartment buildings they were on campus on a university campus and and while you can make good money in that business you have basically a hundred percent turnover every year and and I don’t like that much turned over it’s too much work so I have just evolved into nothing but single-family homes and I do still have the shopping center that I bought a long time ago so the single-family homes we have a turnover rate of about 15 to 20 percent a year so 80 to 85 percent renew and I like that that’s that’s I can handle that and that allows me to you know live another life other than constant management because I do my own management along with with one full-time employee so have just accumulated those houses many of them over the years I’m a buy and hold guy I do sell once in a while you know when I my daughter gets married I got to catch something in or

the daughter goes to college I got to catch something in but yeah basically I like to buy and hold and let those tenants pay down but it was probably I think I had about 15 single-family houses in my name back in the late 70s when I attended a privacy and asset protection seminar and my eyes were were open wide as to the risk that I was taking by owning real estate in my own personal name and I quickly found out that there really are no advantages to owning real estate putting your name on the top on the title and the deed there no advantages to it their only disadvantages because you get all the same tax benefits even if you put it in trust you just don’t have the same amount of liability and so that really opened my eyes and made me sit back and start looking for ways to hold title other than in my own personal name and of course you know it resisted corporation back in those days there were no LLC’s but I did discover the Land Trust and have been using them ever since yeah yeah I know that here’s what I know is that there’s a lot of people that don’t use them obviously and and when you talk about it they’re interested wow that sounds like it’s a great thing yeah I’ve been meaning to do that and they just – it’s just life gets in the way or things get in the way but I’ve never I don’t think I’ve ever met anybody that uses land Trust’s that regrets doing it they never say yeah I did him for awhile but I did I stopped because there’s no that I’ve never I’ve never heard that personally okay I’m glad you mention that I’ve never either it’s an interesting perspective yeah yeah so so maybe you could talk a little bit about what a Land Trust is and then maybe you could tell us the story that you kind of mentioned to me briefly before we started that happened to you over the past year okay well a Land Trust is really nothing more than just a few pieces of paper you need a deed and you need a trust agreement those are the two documents that create a Land Trust the trust agreement could be written on the back of a napkin or it could be a hundred pages long just depending on how much meat you want to pack into it the deed is called a deed in trust and it’s very similar to a warranty deed but it’s got a little a little different language that helps create the trust so it’s it’s really not as intimidating as it might sound all you do is form your trust agreement and then you file the deed and it’s not it’s either taken out of your name and put into the trust at that point or the smart way of buying real estate is to take title directly from the seller to your trust and never go on the top on the chain of title that’s the best way to do it but for those of you investors out there that already have real estate in your name it’s still very very important that you get it out of your name for a whole bunch of reasons in fact I keep getting asked the same questions over and over about land trust and so I I sat down about Oh 10 years ago and I wrote a booklet called thirty two reasons to use a land trust and then I revised that about a year or two ago and now it’s called 50 reasons to use the land trust okay it’s because not only do I discover new and creative ways of using eustress but a lot of my students do and then they tell me about it but certainly the the number one reason to use the land trust is privacy of ownership because if you get your name out of those county courthouse records it will save you a lot of problems not from all the way from avoiding identity theft to avoiding liens and judgments on the property that’s held in the trust so they’re just a whole bunch of reasons and in fact if any of your listeners and Watchers Mike I want a copy of that book the fifty reasons to use the Land Trust I’d be glad to send it to them for free all they have this send me an email yeah Rainie let me ask you this uh in terms of liens specifically so I have a bunch of rental properties and we get you know what happens most often is um we’ll find out that we I don’t know that we had too many issues with liens because we’ve always kind of caught it beforehand but of course who knows until you go to sell a property what might be on there but we get you know we get code compliance warnings all the time and it’s kind of messy in some so in the market that I’m in there are several cities and every city handles it differently some of the cities you have a certificate of occupancy that you have to get for each tenant so I have a separate property manager so they usually their name is on the certificate of occupancy so if there’s a code

compliance issue some of the times it’s not that consistent it goes to my property manager some of the times it comes to us and some of the times we get it you know something in the mail that says that somebody you know the grass is too long and it needs to be fixed by this date and we’re like well that date was yesterday like what now so you’re always kind of at risk of getting you know liens put against your property for silly stuff with tenants that you just really can’t control so are you saying if you have your property in a Land Trust they wouldn’t be able to apply those liens against it no I’m not there are different different types of liens let’s talk about that mozzie for example if you put your property your rental property into a Land Trust and then you go out and hire a contractor to put a new roof on the house and you don’t pay him he can lean in the house yeah what what I mean by avoiding liens and judgments is that there there are many people out there in the United States especially at since we’ve just gone through this this terrible economic situation many people out there that lost their home lost their business defaulted foreclosed on and they have liens and judgments against them personally and if they go out and buy a piece of real estate today and put it in their name the lien or judgment against them personally will immediately attach to the real estate and so pretty much it puts them out of business if they weren’t wanting to be involved in investment real estate yeah I see but if they put it into a land trust that they take title of the real estate in a Land Trust liens and judgments filed against them will not attach to that property I see and now if you don’t mind maybe is a good time to explain what I experienced personally hurry out on the shopping center 35 years ago a friend of mine and I decided to buy this shopping center it’s a 50,000 square foot shopping center in the town where I live I insisted on putting it in a land trust so we did and we became Co beneficiaries to the Land Trust now in nineteen and I’m sorry new year 2000 he moved out of town moved to Florida was a big-time real estate developer made millions of dollars was very successful until the crash and a 2008 his world came crashing down and he’s been struggling every since last summer he was August of last year I was reading the liens and judgments that are filed in my County and I saw his name pop up and a bank out of Florida filed a 3.4 million dollar lien against him in my County here in Illinois now why did they do that well I’m sure they filed it in the county where he lives in Florida also but they they knew he came from here they suspected that he owned some real estate here so they filed a judgment it’s called a Memorandum of judgement in the county which is like throwing a wet blanket over everything you own yeah in the county in your name now had I not insisted 35 years ago to put this shopping center in a Land Trust that lien that 3.4 million dollar lien filed against him would have been immediately attached the title that he and I own and I would have immediately lost 35 years of equity 35 years of work toil investment whatever you want to call it it would have been gone in a heartbeat yeah for something that I didn’t do right because I would have been on a title with somebody so you never never never go on title with anybody and in my opinion you never go on title yourself either not with your spouse not with your your best friend your business associate there’s just no advantage and owning real estate in your name personally yeah yeah a few questions I had about for folks that are listening I’m trying to think of kind of objections that people would have to look at you know I don’t want use the Land Trust because of this so if you’re if you’re borrowing money let’s say for example I have lines of credit with some different banks that I borrow from to buy rental properties would they lend if the property was in the name of the Land Trust or how does how does that work well generally the answer is yes but it depends on what kind of a loan you’re getting Mike if the loan is is being underwritten using the secondary market loan standards so in other words if it’s going to be a federally backed loan a 30-year fixed-rate type thing they will not let you close directly into your trust you got to close in your name and sign one hundred and twelve pieces of paper they record it your name and then

you transfer out of your name a week later into your trust yeah okay but those secondary market loans are our scarce Bank of a Bank of America for example will only allow you to have four of those so what if you if you’re going out to buy your fifth property you can’t go to Bank of America some lenders will go up to ten but I’ve not heard of any that goes more than ten so if you’re very active in this business I you’re going to have to find another source for borrowing other than the secondary market yeah and by the way those Fannie and Freddie type loans also won’t even allow you to close in an LLC or an S corp or any other thing you they’re only going to lend to you in your personal name so it’s a fairly common practice for people to then deed that over to their entity name shortly after they close so thank you for mentioning that you’re exactly right right so what happens is let’s say you get your four loans and they’re great loans to get and then you want to buy a fifth property then then you have to go it up to what I call is a portfolio lender which is I like to deal with hometown banks regional banks the small guys where I can walk in and see the president mind the glass in his office those folks will let you close directly into a trust and that’s that’s the best way to do it that way you’d never have your name on the title for any reason right and so just you know you need to find the right lender to work with and then it’s not a problem yeah and most of those I don’t say most of them I’m not sure I don’t even share with my own banks but I think that those types of banks that are keeping the loans in-house they know who you are they tend to be more flexible in and how they do things and they tend to be when you find the right bank they’re they’re much more kind of real-estate friendly because they they understand it well that’s true yeah well said yes yeah so let’s talk about I guess we’re do how do people kind of get started with Land Trust because I know that again there’s there’s a few things that are like this that seem kind of daunting or overwhelming and I know that after you know how to do them you’re like from what I’ve heard from most people say they’re like wow this is this is actually easier than you know going through all these other processes but I think it’s kind of getting over that hump so it’s honest I mean maybe kind of quell some fears to talk about how people kind of get started with with using trusts okay well let me first say Mike that I I use LLC’s I love LLC’s but not to hold title to real estate and I know there’s a whole bunch of people out there that have real estate in their LLC’s because their attorney told them to and and all I’m saying is don’t title your real estate in an LLC you need to put each piece of real estate into its own separate trust so each property and each trust is insulated from the other I mean just think of it this way if you have 10 properties in held in one LLC and you have a liability occur that’s either uninsured or beyond your insurance coverage on one property and you get sued and you lose they’re gonna get the entire LLC D if that LLC is the holding title to the property so you just you just tied up 10 properties because of one property’s problem so it putting in all your property in any one entity whether it’s a corporation an LLC or even a Land Trust is creating a nexus for a lawsuit right so you know grandma and grandpa taught us you don’t put all your eggs in one basket and you don’t put all your real estate in one entity come so if you got 10 properties you create 10 land trusts well then you might come back and say wow my goodness that’s gonna be a lot of paperwork and be real expensive in it actually it isn’t expensive at all because it costs nothing to form a land trust hmm unlike you know if you created 10 LLC he’s depending on what state you’re in if you’re in California that’s 850 bucks per LLC that gets a little pricey right so all these forms that that I provide in my home study course our Word document forms that you just load them up on your computer and you fill out filling the blank and make a few minor decisions and you hit print I mean it takes me 10 minutes to create a land trust and so it is something that you you need some education on I have and Landy called me yesterday on my office line and she said how can I get the forms quickly for a land trust nice of a ma’am I don’t sell the forms by themselves well I just want the forms I got to do this quick and I said well you know that’s like so you a gun without training you how to shoot it you know how how do you know what you’re gonna be doing if you got these forms how do you know to fill them out you have no education no training and she just didn’t understand and we ended up just parting ways because I’m

not gonna sell somebody a bunch of forms without teaching them how to fill the forms out right but it is like riding a bike once you once you do it then you wonder why you didn’t do it 20 years ago because it is so easy to do yeah yeah talk about some of the other benefits I know you’ve got a of your book fifty reasons easily interest but a couple things that that I think are true in terms of you know transferring those assets to family and family members you kind of eliminate correct me if I’m wrong here you eliminate the need to go through probate and all those things in the event that something were to happen to you may I talk about some of those benefits kind of like to your family into your legacy yeah well that’s that’s a very good very good subject and one really close to me right now Mike because yes you putting your property land trust means that if the beneficiary dies the beneficial interest is immediately transferred to the successor beneficiary and that does not happen if you hold title in your name if you hold title or real estate in your name and you die if that real estate has to go through probate which means it’s gonna be tied up for about a year and there’s gonna be legal expenses and attorneys to deal with and you may your your heirs may need that cash flow they may need that property to pay bills with you know so by putting in the land trust and then if the beneficiary dies it immediately goes to the successor beneficiary and they can make decisions today on what to do with that property yeah so it works really well now most real estate investors because the liability on property this held on the land trust flows through to the beneficiary most real estate investors will make the beneficiary of their land trust an LLC or a corporation and then they may you know they may be direct members of their LLC or maybe their living trust could be direct members of the LLC so there’s a structure there that you want to think about but my wife died in November of last year and we’ve been married for 41 years everything that we had accumulated had been for the for the benefit of both of us and I learned firsthand just how important estate planning is and using a Land Trust is in a close and personal way everything flowed just the way we had planned for it to and and everything worked out really well but I could see just how how much of a nightmare it would have been and in addition to just losing her but to to having to deal with a financial calamity at the same time so I was thankful to die set things up right yes yes I’m very sorry to hear about your wife yeah um well what are some of the other kind of prominent reasons that people I want to say you know I think there’s some people that have this this belief that people are using land trusts to be able to kind of dodge their responsibilities and stuff from a privacy standpoint I can tell you I haven’t I’ve been personally sued a few times for real estate transactions not for rental properties fortunately no issues there but they’ve always been frivolous cases that some attorney took on because the person the reason they went through is because it was on contingency so most attorneys will you know they’ll basically cast out some bait and see if they think they can make money on it and that’s why they do it on a contingency right if if the more work that those contingency based attorneys see that it’s going to be the less likely they are to take a case on contingency right Zac instead whether you’re going to use a trust or there’s other you know you could form your entity in other states and make it harder for like a Texas attorney they go to Wyoming to sue somebody or any of those things but part of it is is just it’s kind of a shield to get rid of those frivolous cases that might otherwise cannot come your way right you’re exactly right Mike and I always tell my students that I don’t teach them this information for them to go out and try to take advantage of somebody yeah I teach it to them too defend themselves against our screwed up legal system here in the United States I give you another real-life example and I think real life means a lot to people that are listening as to whether they’re going to take action and and and use these trusts but real briefly it was about ten years ago I sold a house that my wife and my two daughters and I lived in and six months after we closed on the sale of that house I got a letter from a lawyer saying that the buyer of the house had had to replace an air-conditioner and some flooring and oh he had to replace all the toilets in the house there were six toilets in this house and if I would just send him a check for $8,000 they wouldn’t sue me yeah oh that that really makes your day when you get a letter like that yeah so

I sent him a letter back and I said well dear mr. lawyer you must have mistaken me for the owner I didn’t own the property he sent me a letter back and said well if you just tell us who the owner is or was we’ll go after them and we won’t sue you so I sent him a letter back and I said you know I’m not sure who the owner was I think it was in some kind of a trust I don’t quite understand him really well but I wish luck good luck good luck and you know what I never got a response yeah you know that’s a shakedown Mike that’s exactly what’s going on across America today and I just refused to participate and they you know I can just imagine the conversation he had with his client after he got that last letter well Bob you know this one isn’t gonna be easy as easy as the last ten people that we sued what do you want to do well let’s go on and get to let’s get the easy the low-hanging fruit this guy sounds like he’s gonna be too much trouble right and so just by not owning property in my name even though a land trust aren’t designed to be great asset protection tools they become accidentally an asset protection tool through a story like that that shows you that you just put up some hurdles there and they’ll go off and find somebody else to sue right right yeah well can you talk a little bit about that that’s can kind of separate we talk about privacy and asset protection talk about some other kind of private the benefits that you get of course you don’t have you you wouldn’t probably get do you have an address tied to the for example because I have a bunch of rental properties every day we get mounds of postcards and letters for people that want to buy our properties I mean is that yeah and it’s really not that big of a deal we throw them in the trash or and make some get a few laughs out of the you know poor quality or somebody does it do you still have an address typically tied to those trusts where people can still send you mail and other things well yes and on any deed as you know Mike when you when you record a deed you got to put an address on there for the tax bill and so we use the property management companies at P o box for all mail to go through so it’s it’s filtered through that okay but I think what you’re getting at let me let me tell you another story but yeah just private elaborate on a privacy part of a little bit yeah yeah when you don’t represent to the world that you’re the owner and in fact when you put your property interest you’re not the owner it changes the complexion of your relationship with tenants and especially last August last summer it was I’ve got a ten condominiums in this little complex each one’s put in a separate land trust but they’re all in in complex and last summer we were having the police call to this complex way too often and so when I investigated what was going on I found that no matter what the problem was there was always a bill of things no matter when the police were called no matter who else was involved she was always involved and so when her lease came up for renewal last August first I told her we’re not renewing your lease and she said well why not and I said because the owner told me not to because of all the trouble you’ve caused around here with you know with other tenants and the police coming and all that well of course she was upset but you know you know that was pretty much the end of the conversation with me because I’m just the property manager you know I’m not the owner you know leave me alone I just you know I hate my job like everybody else I just can’t wait so she left me alone but three days later I get a call from the secretary might my attorney secretary she says hey Randy there’s a lady Downey in our reception demanding to speak to your attorney what do you want us to do about it and I said what’s her name and they told me and I said throw her out you know she has no right to speak to him but here’s what she had done she had was so upset that her Lisa wasn’t being renewed she looked up online who was the owner of her condo then she looked up in the phone book and found out that the trustee of that trust was my attorney and of course he’s listed in the phone book so she marches down to his office and demands to talk to him about why her lease was a big minute yeah so you can see just how you know how strong how extreme some people get on these management issues yeah you know for a number of years Maya I have two daughters for a number of years they were young and living at my house you know the last thing I want is some irate tenant that I’m evicting because he’s not paying his rent to look me up and come knocking on my door and my seven-year-old daughter answered the door yeah that lady called me last year from Florida a lady landlord she said Randy how do I get your home study course fast and I said well what’s the hurry she said I own eight rental

properties down here in Florida plus the house I live in and one of my tenants is a man he’s interested in me I’m not interested in him and I just had one of my tenants call me and say that he came looking for me at their house so what he’s done is he’s looked up online everything she owns he’s going house-to-house trying to find where she lives personally now you were talking some serious stalking here my you know and so these these stories are real you know if you live long enough in this business you’re gonna experience some of the stuff and if you don’t protect yourself you’re gonna pay a dear price yeah you know it’s not that hard to do it’s not expensive to do please do it yeah yeah he talked about that that a phenomena like that where if you already have properties in your name and then you transfer them into a land trust people can obviously kind of back further and maybe see you I mean how is there anything you can how much it wouldn’t offer obviously as much protection as if you’d put it in there in the first place but kind of talk about that issue of transferring it over and people still being able to kind of go back in the chain of ownership and see who was well yeah if you’re in the Chandler title you can’t do anything about that but yeah once you get out of the chain of title and transfer to a trust you can’t assume that that that person that transferred out of the out of their name is the beneficiary of the trust if I may be the beneficiary of the trust right because my trust may have bought it from you so it you know to make that leap to say that you’re the beneficiary the trust is is unrealistic now furthermore the trust agreement on a land trust is not recorded anywhere so nobody until they sue somebody and go through a lot of legal expense in probably a year or two legal wranglings will be able to find out who the beneficiary of that trust is hmm so if it’s in your name there are fifty reasons to get it out of your name yes it’s not the best thing you have the best is to take title directly from the seller to your trust but my gosh don’t don’t hesitate just because you’re thinking well somebody’s going to assume that I’m the beneficiary of the trust sure yeah as a reason not to do it you know if you want to if you want to make it look better you can sell that property to your trustee on an installment contract with no payments and no interest for five years and record that and make it all look real legit and it is legit the only the only reason why I do it that way without payments or interest is you don’t have to report the sale to the IRS until the first dollar is received so if I don’t receive a dollar I don’t have to report it as a sale yet it’s legally been a sale on the books in the courthouse records so you know there are ways and I discuss these ways in my home study courses about how to do this creatively yeah yeah well we’re going to add some links down below the video here for folks that want to learn more Randy but definitely appreciate you being with us here today and sharing your insights and I think everybody listening to this right now a lot of folks that have been around for a while they understand the importance of protecting those assets because you know we work hard in this business and you don’t want to get to a point to where you feel like the feeling that somebody could take it all away from you is not a good feeling no it is an older you get the worse that feeling is yeah yeah well Randy thanks again for being with us they definitely appreciate your time and great to see you my friend thank you Mike appreciate your time all right we’ll talk to you soon are you a member of flippin er comm the most robust real estate investing platform in existence where you can find off market wholesale deals and great vendors literally in your market you can get access to advice from experts and learn about local clubs and events right in your back yard if not please visit Flippen or comm and register for a free account you can register in less than a minute it’s pretty much the coolest site that’s ever existed in the real estate investing industry so get on over to flip nerd dot-com

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