Today’s REI Classroom Lesson

Listen in as Jack Shea goes over personal property trusts, including some of the many benefits that have for real estate investors.

REI Classroom Summary

Jack Shea explains why personal property trusts are inexpensive, private, and can be split between parties.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now let’s meet today’s expert host.

Jack: Hi. My name’s Jack Shea and I’ll be hosting the REI Classroom event today. I will be talking about personal property trusts.

Mike: This show is sponsored by passiverental.com.

Jack: I have been using trusts for many years in my real estate business. I grew up in Chicago where it’s been it’s been the law since the 1890s and when I moved to Florida, I found that they had a trust statute. But they’re used all over the US and the personal [inaudible 00:01:01] somewhat simpler than a land trust and it’s used for holding notes and mobile homes and cars and boats and airplanes and things that are not real estate.
So it takes the title off the public record, say it’s a car or a mobile home and it’s the Mountain Growth Trust or some name on the stat and many things. So there’s a trustee name and the beneficiary. The actual owner is not a matter of public record. And it’s legal. It’s legal in all 50 states.
So I like this particularly for holding notes. So we take in the note in the name of this Bay Investment Trust and this trust is the owner. Well, I would pay for it, maybe it’s with IRA money or my own funds, whatever, and then I talk to some of my friends who are investors and see if they would like to own a portion of that note. So I can divide up three or four or any number of different ways where they can have it 25% share of the beneficial interest and we don’t have to go to the court house and change the titling of the note.
Let’s say I picked up a couple of people who want a third of the note and so we divide up the payments and I would collect and service the note and then disperse their share. At some point, partner B may like to get out of that note and so we say, yes, I will either buy him out or the other person or analyst or he brings another investor. So somebody else buys his beneficial interest or maybe we each buy half and we have two investors. We don’t go to the courthouse. We don’t have to go back to the courthouse and retitle the note. So it makes things easier to do, faster and less costly to get stuff done.
Personal property trusts are for mobile homes. It’s in mobile home parks. It’s not usually the land because the problem is the land is owned by a land trust and mobile home is the item that causes accidents or burns down. So that can be held in a personal property title at the DMV.
So I find this vehicle, very useful. It’s inexpensive. It’s private and it allows splitting and sharing in any number of different ways. Actually my partner, Mark Warda, has a personal property trust book – the only one I know of in the country. It’s available on his website galtpress.com. I think it’s about $35 and it has a CD with the form. So if you want to do this, I’d suggest that you can pick up Mark’s books, mailed direct to you. We covered it our land trust classes. So there is an item that can be helpful, useful, profitable for real estate investors and I hope you find it useful. Thank you, and we’ll talk another day.

Mike: Passiverental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit Passiverental.com to learn how to purchase cash flowing professionally managed rental properties and the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting Passiverental.com.
Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business. And you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They are available at FlipNerd.com/shows or simply search for “FlipNerd” in the iTunes store.

 


 

Jack Shea
I have been investing in real estate, notes and personal property for over 25 years. I use trusts in every deal: options in many and IRAs and 1031 exchanges whenever possible.