Real Estate 101 and Beyond

I had actually decided I wanted to do something to raise money for The Wounded Warrior Project a few weeks ago, but decided to wait to announce it until we were closer to the month of May in order to coincide with Memorial Day. I think it's a great organization, and this was an easy way for me to help a group I feel we owe so much.  In light of the recent events in Baltimore I am even more motivated to start this campaign. What does Baltimore have to do with a private persons random decision to raise money for The Wounded Warrior Project?  Well, I'll just hop right on my little soap box and tell you. It all started when I heard a "demonstrator" attempt to justify his actions by saying it was his "right" to do so. ??? As we all know, our freedoms and justice system created to protect them were not free. They were paid for at a very high price. That price was paid for by the death of countless men and woman who sacrificed absolutely everything for those fr...

As promised, this is going to start off a short series on the FAR BAR As-Is Contract. I was feeling bad about how long it has taken me to get a new post on here, but it turned out for the best. Last week I gave a short little presentation on the As-Is to a group of investors at the Leverage Connections Network Meeting and the questions from the attendees were fantastic. Their questions made me more aware of what content will be helpful for newbie investors – and some more experienced ones who may have gotten a little lazy. Sorry, truth hurts. Before we get into the terms of the contract let’s first have a quick little discussion about what using an As-Is Contract means. An As-Is offer means the buyer accepts the property in its current As-Is physical condition. That means if the house has a bad roof buyer accepts the responsibility of that roof. It does not mean buyer accepts the fact that there is an open roof permit pulled to fix the roof or that there is a code lien on the p...

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...