All Forum Posts by: Bill Walston

@John Moore, a Land Trust is certainly beneficial when properly used. That being said, a land trust, in and of itself, provides NO asset protection. Unless you consider anonymity to be asset protection, that is :)

@Caleb Zuniga It's not that a land contract or a CFD has been "ruled as circumventing foreclosures."

I think you may be referring to a post by my esteemed colleague @Bill Gulley, where he said, in relevant part, "[t]here have been some recent issues with contract for deeds, they have a pre arranged quit claim deed to be used in the event of default and have been determined as circumventing state foreclosure laws."

He is spot on. SOME CFDs required that a quit claim deed from the buyer back to the seller be held in escrow. In the event the buyer did not make timely payments, stopped paying, or otherwise breached the contract a clause was triggered that released the quit claim deed to the seller, thus returning the property without the need of foreclosure. This DEFINITELY circumvents the foreclosure process in all states.

So, whether the CFD attempts to circumvent foreclosure would depend on how it is written. Just another reason to have your documents prepared (or reviewed) by a competent real estate attorney and not just downloaded from the 'net, but I digress.

Thanks for the heads up @Steve Babiak ... @Bill Briscoe pretty much summed it up when he quoted the relevant part of my blog post. My opinion is that landlords would not have to file 1099s UNLESS they were considered a real estate professional and their activity is considered a "trade or business."

@Jonathan Robinson - Smart move! If you're not a member already you need to join your local REIA. There's a good one in your area...Metrolina REIA. The best way to find a good real estate attorney is to get referrals from local real estate investors.

Daren, my vote is for an LLC with an S-Corp election...but that's just me :)

@Bill Mitchell I'm assuming that you mean the two years of landlord experience that Freddie requires before allowing you to count the projected rent as income for loan qualification. (Fannie does not have this requirement.) Once you hit the two years of experience that's it..it's not a per property qualification.

@Steve Smith , I think the segment to which you are referring is when I was discussing the private lender having to qualify an OO for the residential loan. I had mentioned earlier that DF did not apply to loans made to investors. There are some private lenders who loan directly to end buyers and in those instances DF would apply.

Curt Smith is spot on with his assessment.

@Ivan Jenkins to answer your actual question, I think this is the perfect scenario for you to reach out to your long distance landlords. Not only that, your offer could/should involve owner carry - after all, you have an "on time payment" history with them.

And @Sean Kuhn and @Andy Collins, how are you making the determination that this property will not cash flow based on the info given? You have no idea what the expenses and debt service would be. The cash flow, or lack thereof, will be determined in large part by the deal Ivan negotiates with his current landlords.

@Eric B. , here's the deal... This agreement about the extra $5K really has nothing to do with you. It is an agreement between your grandparents and your parents. The agreement would be the same whether you buy property or some John Doe off the street buys the property. It really doesn't matter whether you think they are deserving or not. Whether his family gets any of the money is dependent on how the estate was settled on his passing. Even if your aunt has your grandmother's POA she has a fiduciary duty to act in the best interest of your grandmother.

Just my .02...

I would agree Jacob, IF the property was completed and in service. However, the OP said that the property will not be ready to rent for another four months. Accordingly, these expenses will need to be capitalized and added to the cost basis of the property.