LAND TRUST: An agreement between two or more parties whereby one party (the trustee) agrees to hold ownership of a piece of real estate for the benefit of another party (the beneficiary).
Burned-out landlords are great to work with because they are investors themselves, so they are more likely to just look at the bottom line than the average homeowner. They also under- stand subject-to transactions better than most, which is important since they can be a little hard to understand.
thing. Our goal is to get the mortgage out of their name in less than five years, but we would never guarantee this. TRM What should investors know about setting up a subject-to transaction? JAY AND ANNIE We do subject-to deals a little differently than a lot of other investors. Many will choose to have an actual closing and get a new title. We convert the properties into a land trust so that we are the beneficiary of the trust along with the current owner. This is important because the current owner remains a part owner and helps us avoid the risk that the lender will call the loan due, which they have the right to do if the owner sells the property but keeps the mortgage in their own name. With the land trust structure, we have full control of the property and can mortgage it, sell it, rent it, etc. but the owner still has interest in the property, which is important to the lender. It also helps the original owner of the property feel more confident about the transac-
tion because they know that if we ever did not pay the loan, they could get the property back.
TRM Can you tell us about a recent subject-to deal that you have done?
JAY AND ANNIE Recently, we received a call from a woman whose husband had died unexpectedly. They owned two houses, their residence and a rental, but her tenants had moved out and left the property a mess. Her income was limited; she was recovering from a tragedy, and she had a child in school. That property and the roughly $1,000 mortgage payment was consuming her. She told us, “I just want to walk away with $2,000,” and she did not care when she got that payment if it was in our agreement that we would pay her the money when we paid off the loan.
“Subject-to investing is all about having a different mindset, an atypical mindset compared to how the majority of society and even the majority of investors think about real estate. It’s about offering a different kind of solution that works for investors at a lot of different levels and is also at times, perfect for homeowners as well.” – Annie Adkins
TRM If a landlord has a property that looks like a good fit, what do you do?
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JAY AND ANNIE We simply ask them if they would be interested in us taking over the property and being responsible for the mortgage, the repairs, every-
Jay and Annie Adkins are real estate investors and agents with Prudential In- tegrity One in Columbus, Ohio. They may be reached at Annie@lifeonaire.com.
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