Trust: revocable vs irrecoverable

[Blake Johnson]

Which is better for real estate, revocable or irrevocable trust? I’m an investor in single family homes.

[Chris Mason]

Originally posted by @Blake Johnson:

Which is better for real estate, revocable or irrevocable trust? I’m an investor in single family homes.

 There are a lot of considerations going into that; I'll stick to what I'm professionally qualified to comment on.

One of those two options, a revocable living trust, can get a normal agency-subsidized Fannie loan, assuming you are interested in leverage and otherwise can get Fannie loans. Here is Fannie's living trust checklist. Many lenders will have overlays that are more restrictive than that checklist, others will not. 

This applies to purchases or refinances. So, unlike folks using other entities to hold title, you can buy, refinance, etc, without needing to shuffle title back and forth in between closings (which has costs of its own) if title is held in a revocable living trust. On our end internally, the way we are set up (other companies will differ) it's a 2 business day wait for a lawyer to review the trust paperwork, review Fannie's checklist, and make sure it all lines up (bonus tip: if Fannie loans are of interest to you, it wouldn't be crazy to give that checklist to the lawyer helping you set it up -- that way if there's a conflict between what you want and what Fannie wants it's identified early & not a "surprise" later on). Typically that internal lawyer review happens when we're otherwise waiting on the appraisal to come  back anyways, so no delay is apparent to the borrower.