Re: Sellers just don’t go for the PACTrust! - Posted by Bill Gatten
Posted by Bill Gatten on November 12, 2000 at 13:26:58:
A few thousand folks around the country would agree with you. However, whether it?s the PACTrust or anything else, if you can?t sell it comfortably, then its either definitely not for you; or you need more instruction in how to do it. A simple land trust, if it works for you, is the easiest way I know of assuming ownership?don?t stop doing it.
Candidly though, here is the total sales pitch for selling a PACTrust (And I have never had anyone EVER suggest that it sounds shady or too complicated):
“Hi, I saw your ad in the paper today (or ‘saw your sign out front’), and I?m looking for folks who are selling on their own, who might be willing to sell to me on the basis of keeping the existing financing in place for a while…a year or two. If so, I?ll handle 100% of all of the mortgage payments, taxes, insurance, etc. just for the right to the tax write-off and to be able to [re]finance it in my own name in a couple years.”
Nicky, remember that the “manner” or system by which you protect yourself and the seller shouldn?t become important until the issues (or their objections) come up…after the prospect has been sold on leaving the loan in place. At that point, if you understand how the PACTrust works, you can then block virtually every objection they might come up with (DOS, tax benefits, asset protection, non payment, potential for damage to property, ease of dispossession, 3rd party transferability, etc.)
For example, how would you accomplish just the following items with a simple land trust (which, by the way, we do by the dozens, and which we advocate as singularly the best means of holding ownership interest for yourself…alone).
Transfer of tax benefits to a resident third party who would live in the property under a “sandwich” arrangement
A trust ?equity-share? arrangement with full tax benefits to the resident owner, wherein after selling the property, you freeze your equity, eliminate financial and management responsibilities to the property, while continuing to share in all future profits (principal reduction, appreciation, cash-flow etc.) while someone pays all the bills.
Avoidance of partition by judgment creditors… for ALL parties
4 Rapid and simple eviction of a recalcitrant purchase option tenant
5 A doubling, tripling or quadrupling of net rental income from a tenant in your trust-held property.
6 Obtaining an agreement by your tenant to cover 100% of all maintenance management and major repairs (e.g., new roof, hurricane or earthquake damage, etc.)
7 The ability to make BIG money in ?no? equity, ?marginal? equity and ?negative? equity properties.
8 Avoidance of violation of the due-on-sale clause, versus simply surreptitiously hiding it
I currently have a couple properties that are not in PACTrusts?I even now have one on a lease option, and another in a simple land trust. However, the reason I like the PT overall is because it gives me the freedom to meet virtually any buyer?s or seller?s objection head on, and deal with virtually any property out there: whether is upside down, fallen to the ground or besieged with creditor or tax liens.