Every real estate investor should be using Land Trusts in their business. Watch this video to learn why and how!
Fellow Real Estate Investors, if you enjoyed this video today then it is really important that you post your comments below and let me know. If there are other specific questions or topics that you would like to learn about then be sure to mention that as well!
To your Real Estate Investing Success,
Brian Evans
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Great Video Job Brian explaining the Land Trust. I’ve never heard it explained this simple.
Question: If I buy a property using my self directed IRA, can I put the property in a land trust inside my self directed IRA?
Please advise Coach.
Brandon
Brandon – great question, and I love the fact that you are wanting to do deals in your Self Directed IRA! This can be some what confusing but I’ll try to keep it as simple as possible:
In this case, nothing really changes. You designate someone or an entity to be the trustee for the Land Trust when you are purchasing the property. Then, your Self directed IRA FBO account # will be the Beneficial interest in the trust. This beneficial interest will only be listed in the Trust agreement (not on public record).
Make note though, that there can not be any debt on a property if you are looking to buy and hold a property with your Self Directed IRA. You can do one of two things if you want to purchase with your IRA: (1) You must have cash in your self directed IRA to purchase the home outright. or (2) You can get an option to purchase a property and then find a buyer to pay you more than your option to purchase contract. The difference in funds will go into your IRA.
Hope that helps!
Coach
Actually, there CAN be debt on the property, but that debt must be non-recourse to the SD-IRA. The SD-IRA must not have any liability on the debt; only the collateral that is securing the debt is the sole recourse for the lien holder.
Also, the SD-IRA is solely responsible for all costs, like maintenance, repairs, improvements, taxes, insurance, without any assistance from the owner of the SD-IRA. For example, if the tenant doesn’t pay the rent, the SD-IRA owner cannot “make up the difference” (as a loan or gift to the SD-IRA) to cover the expenses. The SD-IRA owner cannot provide any financial assistance or participation to the SD-IRA.
The beneficiaries of the land trust should be limited liability entities, like an LLC, because the land trust will not insulate the beneficiaries from liability.
The company handling your Self Directed IRA will best guide you on the fine lines not to cross. The company handling my investments is Equity Trust Company. Just remember that you, your entities, and your IRA should always be handled separate from each other.
Some of the topics mentioned above are worthy of another comment:
First of all, understand that a Self Directed IRA seminar can