Real Estate Investing 101 and Beyond

I recently jumped back into the eviction arena after taking a break from all litigation in order to start my family. I was very hesitant to do so because the last time I filed an eviction in Central Florida it was a very tenant friendly environment where landlords were villainized, tenants’ requirements under the statute were completely ignored and judges threatened attorneys and property managers with contempt of court. It had become an area of practice where my law firm was losing money because tenants knew they could file any old thing and drag out an eviction if there were willing to show up for hearings. When the new landlord tenant statute changed I read it over to compare the old with the new and was totally surprised at the changes. I blogged about some of these changes in an earlier post which you can see here http://richardslawfirm.blogspot.com/2014/09/new-landlord-tenant-statute-seriously.html . Even with the landlord friendly changes I was still hesitant, but one of ...

I am the biggest advocate for land trusts you will ever meet. I have successfully used them in so many scenarios that have made deals, saved deals and killed deals (on purpose) that there is no way anyone is going to successfully argue with me that land trusts are not one of the best tools available for real estate investors. Hands Down. With that said, anyone that knows me will, I hope, say that I am a pretty straight shooter. So, today, I am going to admit that there are two sides to every coin and will discuss a few of the negatives. Negative #1: Hazard insurance is more expensive when property is held in a land trust. Some clients tell me the price difference was enough to steer them away from land trusts completely while others have said it wasn’t that big of an issue. I believe it all depends on your agent. Like everyone else on your team, make sure your insurance agent is investor friendly. Negative #2: Some counties will require that an attorney file an eviction o...

Let’s just get right down to it and really start to ruffle some feathers.  I will pose questions and statements I hear fairly regularly and answer them with a simple true or false followed by the answer I would give were I not bridled with those annoying little obligations of professional decorum and courtesy. Hey, it’s a blog. Anything goes. Right? 1.      Land Trusts Are Illegal:         FALSE Do all of you remember when your Mother explained to you the difference between stupid and ignorant? Well, I do and I won’t go into all the details, but the short version of that rant can be summed up with these two examples: a.       Ignorant means you have a lack of knowledge about either a specific subject or in general. I know nothing about nuclear physics and probably wouldn’t understand even if someone tried to teach me. I am ignorant when it comes to that topic. b.    ...

Now that you know all the players as discussed in Part I, let’s talk about how we can sub them out. The most common substitution in the land trust world is an assignment of beneficial interest. An assignment of beneficial interest is a very simple transaction whereby the current beneficiary assigns all or part of his or her beneficial interest to some other entity capable of holding title to real estate.   Benefit 1: The transfer can be accomplished via a simple 1 page document. Benefit 2: The transfer is not a matter of public record so there is, of course, the benefit of privacy; but also consider the fact that since there is no public record of the transfer you are essentially delaying the reassessment of your property value by the taxing authority thus keeping your property taxes lower.   Benefit 3: Your “closing costs” are cheaper. If you are assigning the beneficial interest for value you will save money by avoiding closing fees and title insurance. WARN...

Simply put, a land trust is a way to hold title to real estate whereby a Trustee holds legal and equitable title to the land, but the beneficiary directs the trustee, manages the property and draws income from the trust. A Trustee can be any legal entity capable of holding title to real estate. In an earlier blog post about Common Investing Mistakes I wrote about a heated argument I had with a prominent title underwriter centered around the fact that an LLC may serve as trustee of a land trust. In the end, we all “agreed” an LLC, a Corp, your attorney, accountant, mother, whoever can serve as Trustee. Even though your trustee can be any legal entity, you should take the time to choose wisely. Choosing a trustee is like drafting a contract - You aren’t choosing a trustee for your situation now; rather, you are choosing a trustee for when the you-know-what hits the fan.  Real Life Example:  During a normal day at the office reviewing and dra...

I firmly believe Land Trusts are one of the most misunderstood real estate investment tools nationwide. My plan it to make this a series of posts that will touch on what a land trust is and what it is not, clear up myths and misconceptions and pass along some tips and tricks. It will be basic, but if you understand the basics you can then start to get really specific and use them to cater to your particular investment portfolio.  I haven’t decided how many parts will be in the series so my plan is to just take one topic at a time and see where it leads. First, my back ground with these creatures: If I had to pick something that was “my thing” it would probably be Land Trusts. Never would I have  imagined when I graduated law school this would be the case, but about 6 years ago Debbie Farnell of Southeast Professional Title handed me Mark Warda’s book on the subject and my gears have been turning ever since. In those 6 years or so I have drafted hundreds of land tru...

No matter how good you are at the real estate game; none if it matters if you can’t close the deal. Here are some basic tips to get you to the finish line with a paycheck in hand without causing your title agents to pull their hair out and without risking the loss of a return client due to irritating and unprofessional mistakes. Fill out your contract completely and correctly: Don’t roll your eyes at this one or skim over it because it’s soooo obvious. When working with corporate entities make sure the entity is in existence and the person signing has authority to act on behalf of that entity. This also applies to anyone using a POA or any other directive to act on behalf of another party. Also, when buying or selling in a trust naming the proper party is a common mistake. Remember, a trust is just a piece of paper. A piece of paper cannot hold title. You must designate a legal entity to hold title on behalf of the trust - the trustee. Therefore, an example of the proper nam...

Well, yes. Landlords have been very chatty about an addition to Florida's landlord tenant statute that requires screens on rental units to be in good working order.  It is petty, yes. Is it typical of Florida as a tenant friendly state, yes. However, before getting too riled up, consider the other suprisingly landlord friendly revisions and additions. Landlords May Now Accept Partial Rent : If partial rent is accepted after posting the notice for nonpayment, the landlord must post a new three day notice reflecting the new amount due or provide the tenant a receipt showing amount and date received and balance due and date is due then place the amount received in the court registry upon filing the action for possession.   No Automatic Dismissal For Defective Notices : FL Stat. 83.60 was specifically amended to state, “The landlord must be given an opportunity to cure a deficiency in a notice or in the pleadings before dismissal of the action...

I didn’t plan on making another blog post for two weeks, but my time at the office this morning changed my mind. This morning alone, I have spoken to 4 people about buying property at the tax deed sale. Over the last 2 months I have seen a dramatic increase in consultations for the same subject. What’s the deal? Has there been a recent investor seminar on tax deeds that has sparked everyone’s interest? According to the Florida Bar News, foreclosure filings are down by half which, by the way, is the exact opposite of what was expected once the foreclosure laws were changed making it easier for creditors to obtain a summary judgment. It stands to reason that if foreclosure filings are down, short sales are also down and so it REO inventory. Where is an investor to find inventory these days? Looks like people are starting to explore the Tax Deed Sale. Here are some things to consider: 1.       As of today, the Orange County Comptroller shows that at their O...

Dear Clients, Friends and Family, Richards Law Firm is embarking on a new journey into social media. Any of you that know me will get a kick out of this little endeavor since I am the least techie person on the face of the planet. I suppose my first post should be about why I am going through the hassle. So here it goes. I became a TN attorney in 2006, married a Florida boy in 2008 and was licensed in Florida in 2009. Once I married a real estate investor I saw my practice make a 180 degree shift from consumer protection to real estate law in what seemed like an overnight span of time. Additionally, the turn was more specifically towards real estate investing . Technically, there is no distinction between the practice of real estate law and real estate investing law nor is it designated by the Florida Bar as an area in which an attorney can call themselves an "expert", but anyone that works with investors knows that it should be. I am...