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Land Trusts for Single Family Home Investments with Randy Hughes, Land Trust Specialist

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Gary Pinkerton starts the show by explaining the importance of asset protection for the investor. He explains that the protection of threats starts with privacy. To continue the topic at hand, Jason Hartman hosts Randy Hughes, a land trust specialist to give insight on when and why to use land trusts. Randy starts by defining land trusts and gives an overview of the key elements of asset protection. He explains how he uses land trusts for single-family homes and other types of investments. Then Randy goes through different regulations state by state.

Announcer 0:04
Welcome to the heroic investing show. As first responders we risk our lives every day our financial security is under attack. Our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant and we need to take care of our own financial future. The heroic investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Gary Pinkerton 0:39
Hello, and welcome to Episode 158 of the heroic investing show. This is a podcast for first responders, members of the military, veterans, and anyone looking to improve their financial future and gain some freedom with their time. We help America’s heroes build passive income, build their startup business and safely grow wealth through real estate and other alternative investments. We help current and prior first responders put protections and systems in place to enable them to build a life where they can focus on their passion, that service or product that they are uniquely gifted to share with the world and be compensated from through a better life of their own. My name is Gary Pinkerton, I co host this show with Jason Hartman and today’s show is coming to you from Jason. Jason is talking with Land Trust specialist Randy Hughes. And Randy has a long history of investing in single family homes himself, he normally will use a commercial loan or more of a local bank loan and he will title the properties in the name of a land trust. So Randy teaches a course on this he’s got a website to help facilitate individuals doing this themselves. I don’t personally use land trusts, although I’ve looked into them numerous times. I do have other trusts in my family, so revocable trusts and irrevocable trusts. And I helped a lot of my clients for their families for their legacy planning for their estates, connect them up with trusted advisors that will help them through that process. Again, though a Land Trust is a special beast. And Randy gets into that quite a bit. I do have plenty of clients and friends, real estate investing friends, who have either used this or considered using land trusts, sometimes we get into this is a or b better, right, a B and A land trust and B, the in LLC s or other asset protection entities. And personally I have stuck with B in this example, I have always used LLC, limited liability companies. And I do that is because from my non licensed and non state attorney licensed view and understanding after studying this quite a bit LLCs asset protection structures or entities, their purpose is to build a wall around your assets. And so the primary purpose is to protect you and your family from your asset. So if an individual at one of your properties Sue’s and you have it in an LLC, or other type of asset protection entity with the wall up around it, then winning a judgment will in almost every state I believe in every state actually will protect you from them taking not just your rental property and what’s in that LLC, but also everything that’s out on the outside your family, your house, your your assets, some states do better job than others and protecting your property from a an attack from the other direction, right. And Garrett Sutton talks very, very well about this in his books and in his interviews that he’s done on Jason’s show and some that I’ve ran here on the heroic investing show. That’s called the outside threat, right? So let’s say that somebody gets hurt in my swimming pool, and they want all of my assets and they win a judgment. The question is, can they get the things that are in my LLC, and that comes down to how good of protection that the LLC structure I have built, how good that wall is from attacks from the outside. And a lot of states, frankly, do not have great protection from the outside. And so states like Wyoming and Nevada and Delaware, and states like that do have better protection in that direction. And then of course, in this great state of California, those of you who are investing from there, you have all kinds of pretty onerous tax impacts. And you need to make sure you understand how many times Am I going to have to pay the $800 state tax for California. And that really depends on how you set your structure up. So certainly in that state, but I would say in any state, it is very much to your advantage. If you’re considering getting asset protection entities in place. Make sure you talk to somebody who’s not just knowledgeable in the concept, but knowledgeable in your state. While I don’t get paid at all from these guys, I can tell you that all of my asset protection. Well, all of my recent asset protection has been done through corporate direct and Garrett Sutton’s team there and so I’d be happy to set you up with the connection that way. So that’s entity protect asset protection. And so I believe in building up walls. The other approach, which can be used hand in hand with this is privacy, right. So if they don’t know that you own the the asset, they don’t know who owns the rental property, then it’s probably harder to figure out who to sue. I think one thing that every attorney who has done any litigation would agree with or would say, is that if there’s enough money involved, if there’s enough interest on the part of the plaintiff, and if there’s enough incentive to their lawyers, they’ll find you, and they will get through this roadblock that’s been put up, which is we don’t know who owns the thing, right? I mean, if they think you own it, then all they have to do is put you on the witness stand and ask, Do you own it? And then you get to decide if you want to go to prison for perjury? Or if you want to just say yes, I own it, then it comes down to how well is it protected? How big is the wall? Right? So the the cloud of secrecy is really the the trust the land trust. And then there’s the wall? And how good Have you protected the wall with corporate formalities and things like that. So this discussion between Jason and Randy Hughes is about the the land trust side of it, the maintaining the privacy side of it. As I mentioned, I haven’t personally gone down the path of adding this to the LLC, some people use this instead of the LLC. And personally, I think that’s like flying or driving without safety precautions, you’re assuming that the bad thing won’t happen, meaning that they won’t figure out who you are, I believe you, at least have to have a state protection in place or asset protection in place, excuse me, you know, get the wall in place. And if you want to kind of make that wall so that it’s not visible as an additional layer, you know, that could be helpful, and it may be necessary. And sometimes, I won’t go down too far down the path of why I have chosen not to use land trusts myself. But I do have lots of clients who use it and lots of clients who asked me about it. And so I thought it would be helpful and useful to have a discussion or to listen to Jason asked questions about the tax impact about the recording aspects of it, how difficult is it to operate, this is really is a very good explanation, over 20 minutes or so of how you execute these. And there’s a great resource course and website that Randy Hughes talks about. So I think you’ll get a lot out of this. Hopefully, my my little introduction there helped set the stage for kind of how I approach this. And I think that, you know, you should listen to Randy, you should check out his website, as well as talk to an attorney who understands your state and make the decision based on how large you feel the risk is how much money you’re talking about, and really how big the asset is. Right? So if you have, you know, I agree with Jason absolutely, that the biggest risk here is that people get so caught up in having to get these asset protection structures in place that don’t ever get the property right. I’ve talked to plenty of people who said, Yeah, I’m planning to get the property, haven’t gotten into contract yet, cuz I got to get my trust set up, I got to get my LLC set up, and there’s nothing to protect there yet. You know, just getting your first little property and getting the experience under your belt. You know, having that one to two years or 10 years worth of experience, before you start worrying too much about protecting what’s not even there yet, I believe is much, much better idea. Many people spend their whole investing career, their whole adult life trying to you know, preparing educating themselves on getting started, the best education comes from getting started. And it doesn’t mean that you get absolutely wiped out, it means that you learn how you could have done a better here and there. And you’re on to number two, and three and four and improving things were often the other people have not yet started. So that’s my advice for you is get out there and get started. Do it conservatively the first time but get the experience, get that experience clock going for yourself. But this is just another tool along with asset protection stuff that we’ve heard from Garrett Sutton and others, and tax benefits to a lot of other education that you can do in the background. But please don’t let this investigating this idea, hold you back from getting started. So with that, here are Jason Hartman and Randy Hughes.

Jason Hartman 9:10
My pleasure to welcome Randy Hughes to the show. He is an expert in the Land Trust and of course, real estate investing. He’s been investing for about 40 years. He’s been using land trusts for about 30 of those 40 years. And we’re going to learn about his techniques today. Randy, welcome. How are you?

Randy Hughes 9:24
Thank you. Thank you. I’m very good.

Jason Hartman 9:26
Good. Good. Tell us about your investing experience. First, have you always invested in you know, just single family homes or have you done other stuff?

Randy Hughes 9:33
Well, I have done other things. I do have a commercial building. And I’ve you know, I’ve tried restaurants and other kinds of business today but but To tell you the truth, I got pretty good at losing money and everything except real estate. So over the years, I evolved into just the single family house as my one and only form of investing.

Jason Hartman 9:58
Okay, good. So so the single family Home has really been the only tried and true investment for you than it sounds like on.

Randy Hughes 10:03
Yeah, it really has. I mean, and I know we’re in difficult times right now as it relates to single family homes. But there are good times in the future. It doesn’t seem like it right now. But there will be the market will come back.

Jason Hartman 10:15
Oh, listen, I tell you you don’t have you don’t have to say that on my show. I think this is a phenomenal time. What people don’t realize so many times, Randy is you will know is that income property is a multi dimensional asset class, it’s not just about appreciation, you can make a fortune just off cash flow, I mean, the cash on cash returns, that the property could value could go to zero. And as long as you’re getting that rent and maintaining your expenses, where they should be, I mean, the cash on cash returns on some of our properties are between 13 and 18%. Without any appreciation, and then you get tax benefits to boot. And I mean, this is a phenomenal time anyway.

Randy Hughes 10:53
In I’m glad you mentioned that because you know the other benefit that you can count on even though you cannot count on appreciation that you can count on amortization of your loan, EMI, you know, you know if you want to be a millionaire go out and borrow a million dollars and have somebody else pay it off for you. And that’s your tenants and you’ll be a millionaire if you never have any appreciation the rest of your life. Yep, I agree. There are lots of reasons to buy and your listeners are going to look back I predict and 10 years and then look back and say, Man, I wish we would have bought more back then in those days when the prices were so low.

Jason Hartman 11:29
Yep, that’s for sure. And when the interest rates were so low, and I don’t think it’s going to take 10 years for them to look back regretfully at missing opportunities. So I hope they don’t miss opportunities. Because the opportunities are, are pretty phenomenal. Now no question about it. And I think you know, Randy, what this really comes down to is not just an issue of price, of course, but of the price of financing. And like you said, if you want to be a millionaire, just borrow million dollars, and outsource the debt to your tenants, let them pay it off for you. And that’s going to be paid off. And then you will have gained a million dollars, even if you don’t have positive cash flow. If you don’t have tax benefits, which of course you do have all this great stuff, if you if you don’t have appreciation, which you which you will as well. So with Land Trust, I mean, why should this be attractive to people?

Randy Hughes 12:14
Well, especially in this market, and I think a lot of people have have come to realize the importance of privacy. And Land Trust, by itself is not a great asset protection tool. But it is a great privacy tool. And I use corporations and LLCs and all these other entities that that investors and their attorneys recommend. But I always start with a land trust in title to the real estate first. Because it hides ownership, it allows for a private transaction. In fact, there’s so many benefits I wrote a book with called 50 reasons to use the land trust. And if your listeners would like me to send that to them for free, I would be glad to do that. Just send me an email, it’s Randy at real estate for profit.com. That’s real estate for FLR profit calm and put in the subject line 50 reasons to use a land trust.

Jason Hartman 13:17
So tell us what some of the reasons are?

Randy Hughes 13:19
Well, privacy certainly is the first thing because if nobody knows you own it, you can operate at the trust level, which is a great level to operate that instead of everybody tracking your every movement through the courthouse records, and whenever you sign a mortgage, it gets recorded in your name, then your competitors, and your creditors and everybody else in the planet can track your activity. So the first step in asset protection is privacy. And the Land Trust gives you that privacy.

Jason Hartman 13:51
Well. About that, though. Yeah, on the privacy note. And maybe now we have to take a break from the reasons for just a moment here. And we’ll get back to those. What is a land trust? I mean, how do you set it up? People can have some degree of privacy inside of other entities like LLCs, especially if they’re in the privacy favorable states like Nevada, but but what what what is it Land Trust, tell us what that is.

Randy Hughes 14:19
Yes, it’s just nothing. It’s nothing more than a few pieces of paper on land trust is two documents. One is the trust agreement that does not get recorded. And that’s the agreement between the trustee and the beneficiary. And the other document is the deed in trust. And that does get recorded just like any other deed, and that’s what funds the trust. So you can set up a trust by signing the land trust agreement and have nothing in it. But if you then deed, record your deed for the property to the trust, now you funded the trust, and there is a piece of real estate in there. Now it’s that simple. You record To deed. Now let’s go back to what you just said about other entities. Yes, you could put your real estate into a Nevada LLC. But just think about that, logically, what if you own more than one piece of real estate? Are you going to have the title held in one entity? Or do you want to put every piece of real estate you own in a separate entity, to insulate it from the other entities, the other other properties, I advise my students to put every piece of real estate into its own separate Land Trust, with don’t put anything else in that trust. And just from a logical standpoint, think about it, if I was going to attack you, and I know you have one trust with everything in it, and I attack just one property in that in that trust, it’s got 10 properties in it. And I want a judgment against you. I’ve got that whole trust all tied up, even though the problem only related to one property, just tied tied up 10 profit.

Jason Hartman 15:56
Okay, so separation and firewalling. I mean, some people do that with multiple LLCs, or they do with a series LLC with it’s got 16 parts to it. And so that makes certainly makes sense segmentation. But the thing I’m concerned about, and this is really the problem like with LLCs. And I find Randy, it’s unbelievable how many investors, I just think they just overcomplicate a lot of this stuff, they’ll come to one of my live events, they’ll be listening to the show. And they’ll they’ll somehow asked me, maybe at a break at a live event or whatever. Well, you know, I’m being told that I should set up a couple different LLCs and all this stuff. And I say, Look, do you own any property? No, they’re just starting out. They’re like beginning investors. And they want to put the cart before the horse and worry about all this as a prediction stuff. And with the LLC, what they don’t realize is that financing becomes a problem, insurance becomes a problem, because like, I’ve got an LLC that I buy single family homes in. And I got to tell you, the only reason I have it is because it’s inside my IRA, and I want it self directed like that. But it’s a hassle every time I buy one of those because insurance costs a lot more. There aren’t many insurance companies that want to write insurance in the you know, in the name of an LLC. Now, if you do properties that are over four units with it classifies them as commercial properties. So if it’s a five Plex or a 200, unit apartment complex, then it’s easy because all of the lenders, all of the insurance companies expect you to use entities. But in these single family homes, it’s just problematic or you know, a triplex or a duplex. So is the trust solve that problem?

Randy Hughes 17:35
Well, yes or no. Let me briefly explain. If you’re, if you’re financing that piece of property through a loan, that’s got to qualify for the secondary market guidelines. In other words, you’re going to Bank of America or chase or any of the big boys and you’re getting a loan, they are going to make that loan subject to the secondary market guidelines. And those guidelines say you cannot close a deal, using a Land Trust, you can put it in the trust the day after closing, but you’ve got to be there and you sign all the documents the day of closing. So the course now you’re limited to nine or 10 of those loans. And then the doesn’t matter if you want by 11 piece of property, you can’t qualify for a secondary market loan anyway. So now you’re forced to go to the commercial lender, the portfolio lender, and those are the guys I like anyway, because they make their own guidelines. And not they don’t have to meet all these huge federal government standards. And they will let you close taking title directly from the seller to your trust, which keeps your name out of the chain of title. And that’s another key element to asset protection is to never take title to the property. Now, in reference to financing. Let’s look at the other side of it. Let’s say you’re going to sell the property and you want to sell on a contract. And it’s in an LLC, that presents an entirely different set of problems. Whereas if you have it in a separate Land Trust, you can sell the beneficial interest on a contract. And if default occurs, you can repossess that beneficial interest instead of having to foreclose, which will save you at least a year in the in the judicial system. And for the professional crook, they will string you out for a year and then they before foreclosure, they’ll declare bankruptcy and stringing out another six months. That doesn’t happen when you sell the beneficial interest in the land trust. And that’s one of the big, big reasons to use these trusts, especially if you’re ever going to be selling property on a contract.

Jason Hartman 19:41
So financing though you can’t do financing mainstream financing through a bank and use the trust right? Not if they’re going to sell the loan in the secondary market. Okay, so meanings they sell it to Fannie Mae, Freddie Mac, etc. So what what about insurance

Randy Hughes 19:58
Insurance? Ah. And I find this I got a home study course, when I got a whole chapter on how to insure a land trust. But the short version is, the insurance policy needs to be in the name of the owner of the property, which sounds logical? Well, the owner of the property is the trustee. Because when you put your property in the Land Trust, the trust, he has full legal and equitable title to the real estate. So the sometimes the difficult part is making your agent understand that you are not the owner, that the trustee is the owner, and that the named insured on the policy needs to be the trustee. And then we go to take it a step further, and we say, the trustee, and all beneficiaries as their interest may appear that prevents you from having to put your name on the policy as a beneficiary and exposing your privacy element. So it works like a dream. But sometimes it takes a hit your agent over the head with a hammer to get him to understand it. But the bigger companies, you know, statefarm, Westfield insurance, Cincinnati insurance, they all understand how the game works, and it’s not a problem.

Jason Hartman 21:08
Okay. And what is someone listening has properties now and they want to put them into a trust, would that trigger a tax liability? Would it trigger a due on sale clause? Would it trigger any other financing or insurance problems? Or maybe like the leases on the properties need to be rewritten to because now that’s a different entity they’re paying? Do you set up a bank account for your trust? Lots of questions there.

Randy Hughes 21:34
Yeah. The mechanics? Yeah. No, we don’t set up specific cash accounts for each trust, you could if you wanted to, but they’re still going to ask for your personal social security number. From the bank, when you open those accounts, a Land Trust is a pass through entity in the eyes of the IRS. That means you don’t get an FBI n number four, you do not file a tax return for you file all the information from that property that’s in the trust, directly on to your 1040 tax return, Schedule II, the same place where you had it before you put it in class, that same information, but on your schedule e it will continue to go on your schedule II, after you put it in a trust because the trust is a pass through entity. In reference to financing you, when you get a loan with a trust, the trustee signs that mortgage that gets recorded in the name of the trustee. The beneficiary typically will sign either a note or a guarantee that the banker keeps in this file and does not get recorded. Spoken smokers. And an entity can be continued as it relates to that property. What’s really interesting about this is one of the byproducts that you don’t think about until you’ve done a few of these is if you run, let’s say run Jason’s credit report. And everything he’s ever bought, he bought in the name of a trust that debt isn’t going to show up on your credit report. Right? Your mind wander?

Jason Hartman 23:07
Yeah, that’s that? Well, that’s mostly good. It’s bad in the sense that if you want to establish more credit that you’re paying on you want to show up, actually, that’ll improve your FICO score, but but who are those loans through? They’re not going to be major bank loans anyway, so they’re gonna be private financing? I mean, who are you gonna get to finance it for the

Randy Hughes 23:31
regional bank? Okay, regional bank, I live in the Midwest, I love Midwest banks that are, for example, out in the country, you’re driving down the road, and you see a bank come up out of the ground, and you stop in and meet the president shake his hand, they make a loan to you to your trust, you guarantee it. And there are lots of regional banks. You don’t have to be in the Midwest, or there are lots of in California in Florida and all over. I just don’t deal with the big boys that Chase Bank of America because they’ve got too stringent of guidelines. And and makin up a little bit to answer your question about people that already have property in their name, Jason, I get this question all the time. Well, should I even bother taking it out of my name if it’s already in my name? And the answer is yes. Because of those 50 reasons to use the land trust, you may miss out on one of them because you didn’t put it into into the trust from day one. But you got 49 other reasons to still use a land trust. For example, selling the property on a contract or avoiding due on sale or avoiding reassessment upon sale. If I sell you the beneficial interest in a land trust, Jason, that does not get recorded anywhere. So if I sold it to you for more money than then I paid for. The taxing body isn’t aware of that, to reassess and increase your real estate taxes,

Jason Hartman 24:54
your property taxes, what you’re talking about. Yeah, but that’s right. But even if they’re not aware of it, Don’t you have to tell them? No, you have to proactively tell them where you might get in trouble?

Randy Hughes 25:05
Well, it depends on what state you’re in. Some states do have do have that rule. They have a law that like in Florida, but that’s the law there. And Illinois, they have that law. But most states don’t have that law. So just depends on what state you’re in.

Jason Hartman 25:23
Okay, so there were 49 other reasons that we didn’t even discuss yet, give us a few of your favorites.

Randy Hughes 25:28
Well, I like the the ease of transfer ability and the ease of linking these trusts together with other entities. From a transferability. standpoint, as I mentioned, I could sell you the beneficial interest in my land trust. And we could do that deal this afternoon. And we don’t have to run out to the courthouse. Nobody knows what you paid for it. So if I’m selling it for more than I paid for it, that profit is not made public. It’s a one page document to assign that beneficial interest to you, when you buy it from me. And the title remains in the same trustees name, although you could change it if you wanted to as the new beneficiary, beneficiary, you could certainly change that. The trustee if you want to, or just keep my trustee, so very easy to do transactions that are below the surface or people aren’t tracking it. We talked about the linking together of land trust with other entities. I like LLCs. I like the series LLC, I like Nevada corporations, I like Wyoming LLC s. But I don’t title anything in the name of those LLC s are corporations, the title goes first into a Land Trust, then the beneficiary the land trust, might be my Delaware series LLC.

Jason Hartman 26:49
Now why do you do that? Why just have two layers? Well tell us about

Randy Hughes 26:54
the number one of asset protection, I’ve got another layer. And when you really get into the study of this subject, which I teach, I have a basic course and an advanced course, on my website. And the advanced material we get into the benefits of of having multiple layers of ownership. But one, one really interesting point here is I’ve had a seminar the other day in San Francisco, and right in front center was a CPA, and he and I took tangled right away or the subject of Do I have to register my LLC in California, if if it’s the beneficiary of the land trust that owns property in California. Now, if you titled California real estate into a LLC, directly into the name of the LLC, you have to register that LLC in California, no matter where the LLC is domiciled. And pay the wonderful $800 a year that they’re going to assess to you in California,

Jason Hartman 27:59
California is a rip off state of the universe

Jason Hartman 28:04
through the Socialist Republic, a

Randy Hughes 28:06
few title that that California real estate in California land trust. And then the beneficiary of the land trust is your Delaware LLC. You do not have to register it in California at just 80 $800 a year. Because here’s the reason and took about two hours. And finally the accountant rages. And he says, You know what? I’ve been thinking about this. And you’re right, Randy. The reason why is the beneficiary of the land trust is not doing business in California, the trustee is doing business because he owns real estate in California. But the trustee of a Land Trust is not required to be registered in the state of California, or any other state to see that the big picture here, Jason is there’s no federal land trust law. It’s all state by state. And some states are, have better laws than others. And you can set up a you can set up a Virginia Land Trust, for example, to hold title to property in California. And from an asset protection standpoint, now you’re really really getting the leg up, because you’ve not taken it out of state that the legal issue has not gone out of state instead of being an in state issue during a lawsuit. So linking these trusts together with other entities is very, very valuable to you. From an asset protection and privacy standpoint.

Jason Hartman 29:33
Let me take a brief pause. We’ll be back in just a minute.

Jason Hartman 29:39
Did you know that you can call into the creating wealth show? Yes, you can call me and talk to me direct for later broadcast on the show. The number is 949-200-8009 or via Skype, Jason Hartman ROI, please make sure you have a good connection when you call, get your questions answered. Participate in the show and share your your experiences with other investors call in 949-200-8009, or Skype, Jason Hartman ROI and participate in the creating wealth show.

Jason Hartman 30:17
On the credit issue, what you said about credit, how it doesn’t show up on your credit report? I mean, assuming you cannot financing, which are you saying you can with regional banks and such, assuming you can get financing? It doesn’t show up on your credit report this that was when you said that it was reminiscent of I’ve heard those people talk about like establishing business credit, corporate credit, a lot of those things, I believe are scams.

Randy Hughes 30:40
I don’t think I don’t think that works. Yeah, that works.

Jason Hartman 30:43
You know, I think it’s kind of like something where there’s some truth to it. And it could work in certain cases, but but one thing I do know about it is that if you get the business credit, you do have to guarantee it the way you said, with Land Trust, same thing, but it doesn’t show up on your credit report as debt, which is good and bad, depending on where you are and how you need to manage your FICO score. But if you default, it does show up on your credit report. So the good part when you’re paying the debts, never shows up. But the bad part when you default on the debt does show. So you know, that’s just sort of a little nuance.

Randy Hughes 31:20
Well, yeah. Eventually it would show up. Now the foreclosure wouldn’t show up in your name, it would show up in the trustees name. If you were being foreclosed on. We’ll

Jason Hartman 31:31
Just make a distinction there. If you would, that that means the foreclosure wouldn’t show up in the county records under your name, but it’ll still show up on your credit report.

Randy Hughes 31:39
Right? Well, it depends on what you signed, if you signed a guarantee, then they have to go through the entire foreclosure process. And then when the dust settles, they come after you as the guarantor. And if you don’t pay that they can get a judgment against you in court, and then collect on the judgment. So the judgment would show up as a as a filing at the courthouse ultimately, but the foreclosure doesn’t because you’ve never sign anything to be foreclosed on. Okay. All right. Interesting.

Jason Hartman 32:09
Okay. What else should people know?

Randy Hughes 32:11
Oh, gosh, land trusts can can be very beneficial from a state planning standpoint. For example, they help you avoid probate. Typically, if you die, your assets are going to be probated and tied up in court and attorney charging attorneys fees to settle the estate. But if if you own a piece of real estate and a land trust, and you are the beneficiary, Jason’s the primary beneficiary, and Jason makes his 20 year old son, the successor beneficiary. When Jason dies, that moment that Jason dies, his 20 year old son becomes the beneficiary. It doesn’t have to go through probate. It’s automatic,

Jason Hartman 32:57
Right. So you you you don’t you don’t pay the government and the lawyers a bunch of money. That’s good. There are so many different types of trusts that you hear about. You hear about a revocable trust and irrevocable trust, and a living trust and inter vivos. Trust, same thing. a spendthrift trust. I mean, there’s like a zillion names for these things. But trusts are really there’s really just one kind of trust, right? And then why do they get those other names tacked on to them?

Randy Hughes 33:24
Well, that’s a very good point. And that’s one of the reasons why it’s so difficult to get accurate Land Trust information anywhere, let alone from an attorney. Number one, they don’t teach lawyers trust law, in trucking in law school. And after law school, most lawyers don’t learn it, because there’s not a lot of money, and I don’t blame them for that. But it consequently it’s very difficult to find anybody that can help you set up and administer your own land trust. Now, here’s where the confusion comes in. Jason, those attorneys and practitioners and advisors that do study trust laws, study about most every other kind of trust, other than the land trust. And you can almost divide the world into all those other trusts and land trust. Oh, here’s how to, here’s how to here’s how to understand the difference. All the other trusts other than land trusts are typically Trust Deed driven. And what that means is the trustee makes the decisions as to what goes on with the property in the trust. And there’s a fiduciary relationship there between the trustee and the beneficiary. He’s got to look out for that beneficiary’s financial interests or he can be in legal trouble. The Land Trust is is beneficiary driven. That means a beneficiary makes all the decisions the trustee doesn’t do anything unless he’s directed in writing to do so by the beneficiary. And that’s the significant difference between Land Trust and other trust. In addition, land trusts are for real Real Estate and real estate related assets like mortgage or contract of sale or an option on real estate. And of course, you know, apartment buildings, office buildings, condominiums, single family houses, all types of real estate go into a Land Trust, you don’t put a motorhome and land trust. Now, having said that, I wouldn’t take title to a motorhome either in my name. In fact, in my advanced course, material, I provide a very sophisticated personal property trust. Because I would, I would advise everybody to hold their personal property in separate personal property trusts as well. So your car goes in one trust, your boat goes in another your shotgun, your ladder, anything with liability to it should be in its own separate personal property trust. And the beneficial interest of a Land Trust is personal property. So for example, you could even hold title that hold the beneficial interest in your land trust, not in your name, personally, Jason, but in Jason’s personal property trust number 234. And that adds another layer. So you know, just depends on how sophisticated you want to get, you don’t have to get real fancy, to at least get the anonymity factor. But I would really encourage your listeners to think seriously about getting everything out of their name, getting it into separate trust. And then either being the beneficiary directly or having one of their answer keys being the beneficiary of these trusts.

Jason Hartman 36:37
Now, how much does it cost to set up each trust? Or is it basically nothing to do it, because they’re not, they’re not entities, they’re not recorded at a certain state, there’s no filing fee, right? Because you don’t, that’s why the

Randy Hughes 36:52
only the only cost Jason is the cost to record the deed. Now, your listeners need to learn how to do this and learn from somebody that knows what they’re doing. And that’s why I put together a home study course, that can be found on my website, at real estate for profit.com. Real Estate, poor FLR, profit calm, then go there, and they can get the basic course then get the advanced course, or a complete package, which is the basic and advanced together. And that’s that’s all over spend the rest of their lives on land trust, because that teaches them everything they need to know. And it gives them all the forms they need. And from there on out, the only continuing costs will be the cost the recording that deed, maybe 2025 bucks, other NASA just loaded up on their computer, and they spit these things out all day long.

Jason Hartman 37:46
Who records the deeds for you, your escrow officer, your title officer? Or who can you get to do it? Well, depends

Randy Hughes 37:52
on the transaction. You know, sometimes I’ll record it, sometimes my attorney will record it. And sometimes there’s cago title who’s, who is the company I use exclusively. They’ll record it. So it really doesn’t matter who does it as long as it gets done.

Jason Hartman 38:08
Alright, well, anything else you want people to know, in closing? Randy?

Randy Hughes 38:10
Yeah, I would just I would like to close with the with the, with the land trusts are not as difficult as people like to make. And they are what my course guy, for example, is 106 pages, it’s not a lot of legal ease, it’s written in, down to earth, easy to understand language, you can learn this stuff. If you’re a real estate investor, and you understand that you can certainly understand this. And it really sets you apart from the whole rest of the town that you’re dealing in. your competitors won’t be able to track you, nobody will know what you’re doing. And it’s just a nice feeling. You go to bed at night and your head hits the pillow and you can go to sleep, not worrying about what’s going on at the at the courthouse with everything you’ve signed in and recorded. And people tracking what you’re doing. And and and following your every move. I think it’s important as a real estate investor to do things on a confidential basis. And certainly, you know, you need to add more property you get the more network you get, you need to have the the asset protection element. And that’s where you learn how to link these trusts with other entities. And so that land trust gives you the privacy, the other entities gives you the asset protection and you get the best of both worlds.

Jason Hartman 39:30
And, Randy, I guess that leaves room for one more question in closing here is that since privacy is the main benefit, any suggestions on naming these trusts because this name will be public record and so it should not? It should not be the Hartman family trust, right? It should be something generic. It’s

Randy Hughes 39:50
all in JSON. So glad you brought that up. I could talk about trusts for days at a time but I have a whole chapter in my course material. One whole Chapter on how to name your trust. Because so many attorneys that will help you set up a Land Trust will say, all right, you got 1010 single family houses, let’s dump them all into this one land trust. And let’s name this the Randy Hughes Land Trust. Yeah, not good. Not good. I’ve even seen Jason, social security numbers, put in the name of Atlanta. Oh, and then and then recorded. Wow. So, yeah, there’s a lot to just the name. And let me give you a quick example, if you were looking to sue a trust, for whatever reason that might be and you looked up the name of the owner of this property? Was the California State disabled Children’s Trust, you might think twice before you’d want to sue that trust? Oh, certainly, we would, it would certainly set you off balance from day one, as opposed to if I look up the name of the trust, the Jason trust, I’d say, Hey, I got the right guy, I’m going after him. But you, you can name these trusts whatever you want to, as long as you don’t infringe on copyrights, or trade, or trademarks. So you know, I could name it the the Florida State Retirement Fund for the world could call to Chicago lawyers investment account, oh, boy, they’re not gonna want to? No, no, no, no, I wouldn’t think you want to take them on. So there’s a lot of psychology behind just naming it. And then there’s more psychology behind the number of the trust. Because I teach people to name and number their trust. And we don’t just number them 1234 or like a lot of attorneys do, they’ll say put the put the address of the property in the name of the trust. Well, that’s really stupid. But let’s let’s think in reverse here, let’s let’s have a little reverse English on that. That thought process, wonderfully named the trust, the address of a property that’s not in the trust. So if the property that’s in the trust is on 123, Vine Street, what if we named it the 234 Harrison Avenue trust that might that might really throw you off and certainly make your attorney run up another four or $500 legal build for you to pay just trying to figure that one out. So unfortunately, the legal system in America has run amok. It’s not about who’s right, who’s wrong. OJ Simpson, prove that to everybody. It’s a matter of who’s got the deepest pockets and who understands the legal system. And I’m not I’m not teaching people this information to have them take advantage of anyone. But I do want them to learn how to defend themselves against what I call the terrorist of the 21st century. And that is the contingency fee lawyer. That’s what that’s where you can get yourself in trouble. And that’s who we’re trying to throw the dogs off on.

Jason Hartman 42:45
Good stuff. Well, Randy Hughes, thanks so much for this lesson today. Very interesting, and very good to have this knowledge and everybody, I hope you’ll take advantage of it. You already give out your website so people know where to learn more. Thank you again, Randy. Appreciate it.

Randy Hughes 42:57
Thank you, Jason.

Jason Hartman 43:02
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