Hi HR, I’ve been getting the very same feedback. Even my attorney, one of the best in the area by all accounts, thinks the land trust thing is a big waste of time and espouses the “just do it” philosophy. Says that there has NEVER been a case in my state of a lender foreclosing because of a DOS violation.
I’m going forward with the land trust approach simply because so many people I respect on this board, with vastly more experience than I, seem to think it is the way to go.
Far be it from me to want to stir another controversy. It appears that the barbarians have been storming the walls again, and we all are in need of a little peace and quiet. I have followed some of the posts with some amusement, though, and as a newbie, I wanted to ask a question that has been brewing in my mind: is this really necessary?
I’m thinking specifically of the land trust/pact trust/subject to DOS issue. Now, before folks start telling me about banks calling loans, the importance of hiding ownership etc (I’m not that green), I understand all that. My point of reference comes from a local man in my reia club that keeps telling me, Just do it. He has taken over 100 loans subject to, in the face of the bank, and they have never called them do. Never will he maintains. Oh, sure, I understand they might, and if the rates rise, yada yada… but I must confess, I start feeling like a newbie, professing the need for the land trust (which nobody here uses or has even heard about) when others arent bothering with the hassle and expenses, and doing fine without the aggravation. Is it really worth it? Is it truly so risky to take a loan subject to, that its worth all this extra effort?
HR
Ps. I have not read the PacTrust yet, and don’t plan to. I like Mr. Gatten’s wit and mind, but ive concluded that that instument is far too wieldy and not worth it. Sorry bill. Maybe someday when my investing needs are greater, but not now.
For short term deals, you are correct, the land trust “charade” may not even be necessary. However, in the long term, interest rates may rise and lenders may start policing loans again. This is especially important if you sell the property on a “wrap” on long term lease/option. The risk is not only for you, but for your buyer.
I like the land trust because of its flexibility. A guy in foreclosure hands me a deed to a trust. He assigns me his interest in the trust. My buddy, an investor, wants the property. I hand him an assignment of beneficial interest. Sure, two deeds would work as well, but the fact that I have (theoretically) reduced the risk of the lender finding out about the transfer makes the property more saleable.