Wholesaling with a Trust

[Demetria Sanchez]

Hi everyone ,

So I was curious as to the correct steps one would take when wholesaling using a trust. Here is my understanding :

1. Establish a corporation

2. Establish a trust (this trust would be used to list my endbuyer as the trustee after I resign from my trust)

3. Once I find a deal, get it under contract using my trust.

4. Assign the contract to my endbuyer and collect my fee.

5. Sign the necessary docs needed to resign from my trust and list my endbuyer as the beneficiary to take ownership)

6.My endbuyer signs the closing docs with my seller on closing day. (From my understanding this is the point where my end buyer is now the owner of the trust).

Before anyone mentions it, I am working towards my first deal. Also, noticing how the real estate contracts are worded in certain states, it seems as if many states have a no assignment clause or I would have to get written consent from the seller prior to assigning the contract( at least when dealing with on market properties. )

Any advice would be greatly appreciated. Thank you.

[Clint Coons]

@Demetria Sanchez

One of the main benefits of using the wholesale trust is to avoid the assignment of contract.  If you can assign the contract, this is the most straightforward approach to take for the buyer, but when using the trust, you might consider assigning the trust itself.  This works as follows:

1. Enter into an agreement with the buyer to purchase your trust beneficial interest.
2. Buyer pays you for the beneficial interest (pays your corporation because the corporation is the beneficiary)
3. Your corporation will assign the beneficial interest to the buyer and resign as trustee.  The buyer then becomes the trustee of the trust.
4. I often recommend that buyer restate the trust agreement to remove any mention of your corporation or you as the trustee (I recommend this step because if title requests a copy of the trust the mention of your corporation and you as the trustee could throw the sale off.)

Best of success