Land Trust is a Good Option for Investors in This Market

Originally posted 2009-01-29 14:53:45. Republished by Blog Post Promoter

There was a great post at www.whataboutloans.com on the advantages of a land trust.  The post goes on to list advantages to the land trust to include:

• ease of control
• ease of transfer
• privacy of ownership

The article further defines the parties that own and use the trust and their roles in the transaction of a trust in relation to the purchase of real estate. 

Another key advantage to the trust that the article depicts is that the “beneficial interest in a trust is considered to be personal property, not real property. Therefore you can assign your beneficial interest in a trust to another party without a formal closing.”

Remember due to recent changes to Fannie Mae’s financing criteria investors need to reconsider how they take ownership of their new investor property.   Those changes are affecting investors who want to refinance the properties in their portfolio and have those properties under the entity, limited liability corporation (LLC). 

Freddie Mac backs many of the conforming loans on the secondary market, so any changes in the rules is very important and should be headline news; hence, this news release. 

The land trust is the best solution to combat this issue. 

Breaking News for Investors

Originally posted 2009-01-04 13:04:51. Republished by Blog Post Promoter

On August 1, 2008, Freddie Mac changed its guidelines.  Those changes are affecting investors who finance the property in their portfolio and have those properties under the entity, limited liability corporation (LLC). 

 

Freddie Mac backs many of the conforming loans on the secondary market, so any changes in the rules is very important and should be headline news; hence, this news release. 

 

The changes are as follows:

• Freddie Mac will no longer approve refinance for any property that has been under a limited liability corporation entity for the previous six months. 
• Freddie Mac is limiting the number of properties the investor can have financed to four not ten as in years passed.

 

The solutions to these changes are as follows:

• Cash is king.  Allow the equity that you have build in the properties you currently own acquire new properties not using a loan; however, with this option you will have to factor in the cost of repairs.  In other words, the cash has to cover the purchase and the repairs.
• All properties that are acquired must be protected.  The way they are protected will still include the LLC.  It will just be a trust that will act as a go between.  The property will be held under a trust with the beneficial interest being the LLC.

 

Remember, these changes do not preclude you from owning properties.  It just changes how they are held and how many can be financed at any given time.  Lastly, speak with an attorney on how to set up your trust and having the beneficial interest going to the LLC.