PACTrust Glitches Revealed! - Posted by Sammy

Posted by Rob FL on November 15, 2000 at 07:52:12:

Thanks for sharing. I think I’ve got it now. The whole PACTrust thing really does intrigue me.

PACTrust Glitches Revealed! - Posted by Sammy

Posted by Sammy on November 13, 2000 at 18:58:23:

#1 Try to convince a seller to go this route! (They’ll laugh you out of town) if not sue you!

#2 Every bank my Realtor has spoken to said its strictly illegal to do. Sure it sounds unbeatable on paper but with a good attorney (The kind the banks can afford) you’re dead in the water 'Ka-Putski"

#3 Just try and find a buyer with cash to enter into this third party beneficiary scam! Buyers that put up cash want to be “Sole Beneficiary” not a third string player!

#4 When and if you ever did get someone to bite on this PACTrust I’d love to see how you will handle the bank that tells the buyer that he is in one of the biggest messes he has ever seen in his entire lifetime! What is this 3 beneficiary confusion your showing me here?

No disrespect here towards anyone, but my Realtor has been in this business for over 29 years and knows the ropes as he says it.

Good luck to all of you if you are using that trust but it just don’t sound kosher to the average Joe, and most sellers are average Joes.

My Realtor says to stay with the regular Land Trust and not to try to re-invent the wheel.

I’m going to do just that!

Sammy

Re: PACTrust Glitches Revealed! - Posted by Bill Gatten

Posted by Bill Gatten on November 14, 2000 at 17:10:35:

::#1 Try to convince a seller to go this route! (They’ll laugh you out of town) if not sue you!

Out of the thousands of sellers we?ve served (?convinced?) with the PACTrust, the only laughing was done on the way to the bank. Out of these thousands of transactions…not one lawsuit or threat of one that had anything to do with PACTrust…EVER. That?s the very reason for using it.

:#2 Every bank my Realtor has spoken to said its strictly illegal to do. Sure it sounds unbeatable on paper but with a good attorney (The kind the banks can afford) you’re dead in the water 'Ka-Putski"

I?m afraid your Realtor is quite mistaken, and making a statement like is ridiculous. If he were correct, then one of the most prestigious law firms in Los Angles (ours), Johnson, Poulsen, Coons and Slater is in some deep kim chee. That?s silly. I take on far more knowledgeable attorneys than the banks can afford on a daily basis, and even do seminars for them on the PACTrust.

Suggestion: Have your Realtor call the same banks again and ask the first one: Is it illegal for a borrower to put his property into a living trust? Then call the second bank and ask: Is it illegal for someone with properties in a living trust to rent or lease them out? Then call the third bank and ask: Is it illegal for the settlor of a living trust to name a friend as a co-beneficiary or remainder agent in his trust? Then call the fourth one and as: ?Is it OK fore a beneficiary in a living trust to be the tenant in a property that is owned by the trust in which he is a beneficiary??

Next, call all four again in a different voice and ask: ?Would it violate my due on sale clause if I wanted to sell my house and I did it by putting the property into a land trust, naming the buyer as a co-beneficiary, thereby giving him all the tax write-off benefits and leasing to him on a triple net lease basis in order to circumvent the Due-on-Sale Clause? (which is what your Realtor friend did, I’d speculate). ?

:#3 Just try and find a buyer with cash to enter into this third party beneficiary scam! Buyers that put up cash want to be “Sole Beneficiary” not a third string player!

Now it?s you who are making silly statements. I make my living finding these buyers and for every property, I have dozens who call on it and wish they?d gotten it instead of the one who did.
Your statement is most ill founded (some folks posting here on CRE might confirm that. Chuck Perry, Jim Pasquini, Bill Mc Kee, Karl Hartley, Steve Love, Marty Weinberg, Jon Polokoff, Robert Campbell, Greg Makin, Tim Panebecker, Jim Piper, Bud Branstetter, Jim Kennedy, Glen Van Ausdahl, Lori Samson (and on and on?). Also, try out the likes of Bill Bronchik, A.D. Kessler, Robert Allen, Ron LeGrand, etc.

I have a mile long list of these ?third string players.? I just closed on a two-tier PACTrust Equity Share this past weekend wherein the buyer in the “scam” is coming in with $10,000 (my costs were nominal) and they?re happy to pay me a $100 positive cash flow, and freezing approximately $40,000 equity for me, in exchange for 50% beneficiary interest and half of the profit (this is the third in as many weeks…not counting the dozens we have done for others in the same period of time.

:#4 When and if you ever did get someone to bite on this PACTrust I’d love to see how you will handle the bank that tells the buyer that he is in one of the biggest messes he has ever seen in his entire lifetime! What is this 3 beneficiary confusion your showing me here?

What’s the confusion? The borrower has a land trust with three beneficiaries. Is that confusing to you? If it is, then I understand your hesitancy to be involved with it. Some land trusts have ten beneficiaries?that would cause a brain loop, I?m sure. That’s the settlor right and is none of the lender’s business as long as their security and their ability to foreclosure for cause is not impaired. When your old uncle Mort set up his family trust and put all of his vehicles, jewels, cows houses into to it and then named your other uncle Newt the remainder agent and a co-beneficiary, along with you, your sister and your aunt (Mort’s wife), did that cause any consternation for the lenders on his properties?

:No disrespect here towards anyone, but my Realtor has been in this business for over 29 years and knows the ropes as he says it.

Certainly. We understand…words like ?scam? ?mess? ?bite? ?bogus? ?third-string player? and ?illegal? are certainly not disrespectful or inflammatory in any sense (especially to someone who sleeps, eats, drinks and breathes and who has dedicated his life to nothing the PACTrust).

Son, I?ve been a Realtor for a lot longer than your Realtor friend has, and I’ve never yet met a Realtor who didn’t presume to ?know the ropes.? How much property does your Realtor own beside his own home? How many houses does he buy for himself a month? Does he subscribe to Creative Real Estate Magazine? Does he post on the creative real estate sites? Has he read my book? Taken my course? Spent any time in the law library researching land trusts? He has?? Oh, well, then I take it all back.

:Good luck to all of you if you are using that trust but it just don’t sound kosher to the average Joe, and most sellers are average Joes.

However, contrary to you level of confidence in the intellect of others, I think most average Joe?s are bright enough to understand getting a bargain and being protected legally if they are approached by someone who knows what they are talking about.

:My Realtor says to stay with the regular Land Trust and not to try to re-invent the wheel.

:I’m going to do just that!

Good! He?ll eat more regularly that way.

Bill Gatten

Living in a box… - Posted by ScottE

Posted by ScottE on November 14, 2000 at 10:07:49:

Sammy,
The PACTrust has nothing to do with “re-invent(ing) the wheel” and everything to do with exercising financing creativity and thinking ‘outside the box’.

IF your Realtor buddy has really done deals involving motivated sellers, then he would also tell you that they will sign virtually any document you put in front of them as long as they know their problem is going to go away. I suspect that although your Realtor probably has experience and skill listing and selling properties, he lacks the creativity to do many of the deals that are discussed here.

You are correct about one thing…YOU should probably just stick to the more conventional ways of the real estate business. If you can’t (won’t)‘see’ and understand all of the benefits, then chances are you will leave something out when presenting it to a seller and that creates potential liability.

Scott

Re: PACTrust Glitches Revealed! - Posted by Rob FL

Posted by Rob FL on November 14, 2000 at 09:07:59:

I do think the PACTrust is quite complicated. And definitely don’t try to explain it to an unmotivated seller unless you are in a few areas of California where it is frequently used.

As for motivated sellers, some of them will sign just about anything to get their money and get rid of the property.

As for 29 years as a Realtor, I am sure he knows alot about the business. One thing Robert Kiyosaki points out though in his book, Cashflow Quadrant, is that many salespeople/brokers know a whole lot about putting transactions together but when you look at their portfolio it is greatly lacking. Meaning most don’t practice what they preach. Before taking creative investment advice from this Realtor make sure to ask him roughly how many creative deals he has done in the last few years. His answer will enlighten you on whether or not he really knows his stuff on investing.

Re: PACTrust Glitches Revealed! - Posted by Tom

Posted by Tom on November 14, 2000 at 05:58:19:

I said the same thing over a year ago and got the guy from Calf. very mad. His living is built around selling that “crap”. You are right on every point, but do not expect support from the course sellers on this web page.

Re: PACTrust Glitches Revealed! - Posted by J. Goodsen

Posted by J. Goodsen on November 14, 2000 at 24:53:04:

#1 Try to convince a seller to go this route! (They’ll laugh you out of town) if not sue you!”

I don’t seem to have much trouble with that frankly. Then again, I took the time to understand the PACTrust. Funny thing, it seems to work with non-motivated sellers too, and even in this hot market here in California. Imagine that? For some crazy reason I am a heck of a lot less worried about getting sued using the PACTrust than I was when I was buying pre-foreclosures at bargain basement prices and doing rehabs. Funny thing though, everyone else I knew buying houses at a discount has had their time in court defending their deals to a guy in a black robe because the seller was now back on their feet and wanted their pound of flesh. Not sure on what grounds anyone would ever sue for the using a PACTrust. I’d be interested to hear you basis for this suit you are sure they are going to file. If I’m going to end up in court for offering someone a better deal than a retail buyer in a protected structure then I’d like to know now. I need a career change.

#2 Every bank my Realtor has spoken to said its strictly illegal to do. Sure it sounds unbeatable on paper but with a good attorney (The kind the banks can afford) you’re dead in the water 'Ka-Putski”

Hmmmmmm. Smells like chowder to me. Wonder what is illegal according to these banks? Could it be putting it into a trust? Nope, you seem to think that is OK…and so do the Feds according to Garn-St. Germain. Could it be assigning a second beneficiary? Nope. None of the bank’s business, but still not illegal and a prudent asset planning tool in any event. Do the banks have a problem with leasing the property out? Can’t be that either, Sammy. Seems those same gentleman Garn and St. Germain saw to it that we could lease our property out for up to three years as long is didn’t include an option to purchase. That pretty much sums up the PACTrust structure. Three strikes and you’re out, Sammy. What exactly is illegal here?

(Just an aside, good attorneys don’t work for banks and they sure as heck don’t work the teller line or answer the phone for your realtor buddy. They work in private practice and for high powered law firms for the most part. Banks don’t pay jack for wages, and you can’t take titles to the grocery store)

#3 Just try and find a buyer with cash to enter into this third party beneficiary scam! Buyers that put up cash want to be “Sole Beneficiary” not a third string player!”

There is the reason. Thanks. I was wondering what was wrong with all those people that were calling asking about the great deal I had going. They seemed to be interested in all the benefits of home ownership with no down payment and no bank qualifying. Now I know what it was. They were all crazy. Good thing crazy people have green money too.

Man, those rich people that pay gobs of money to get stuff out of their name so they control instead of own must be certifiably wacko.

#4 When and if you ever did get someone to bite on this PACTrust I’d love to see how you will handle the bank that tells the buyer that he is in one of the biggest messes he has ever seen in his entire lifetime! What is this 3 beneficiary confusion your showing me here?”

Just a thought, Sammy. Are you running down to the bank to show them any of your lease options, contract for deads, AITD’s, seller carrybacks, silent seconds and various other means of creative financing, or are you a simple 20% down - 6% to the realtor - get new financing and be happy about that great little deal you put together that you stole from that owner at 98% of fair market value?

I’ve got to tell you. They are a heck of a lot more secure in a PACTrust than they are in any other creative financing arrangement. The biggest problems are not the banks, but rather when the buyer or seller brings in their attorney. They don’t know trust law, and then charge the client a bunch of money to come up with points that are flat wrong. Now, once I educate him do you think he rebates the client? I should send the guy a tuition bill for the education I just gave him. No, Sammy, Billy the Banker is just going to see a pile of papers he can’t make heads or tails out of.

“No disrespect here towards anyone, but my Realtor has been in this business for over 29 years and knows the ropes as he says it.”

None taken, but in this interest either your agent doesn’t know what he doesn’t know or he mocks what he does not understand. If you like him you might give him Bill Gatten’s phone number though. Bill can turn him on to a lot of realtors making a bunch of money using the PACTrust. I know. I’ve spoken with them. He might want some of that too.

“Good luck to all of you if you are using that trust but it just don’t sound kosher to the average Joe, and most sellers are average Joes.”

…and putting you on title to their property or any other means of creative financing does sound kosher to the average joe? C’mon Sammy. That’s ludicrous. Why do you think so much of what is discussed in creative real estate investing revolves around finding motivated sellers. They’ll do whatever you want them to because they are over the barrel. Make it work with non-motivated sellers and then let’s talk about it working with old ‘Average Joe’. Using the PACTrust doesn’t require finding the proverbial motivated seller. You can create all the motivation you need in most instances by the structure of the sale. I think you’ll find that greed is a great motivator even where no other motivation exists.

"My Realtor says to stay with the regular Land Trust and not to try to re-invent the wheel.

I’m going to do just that!"

Stick with what you are comfortable with. Last thing I need you doing is screwing the PACTrust so they it gets lumped in with flipping. Call me selfish, but the fewer people doing it the better as far as I’m concerned. I’d be just as happy if Bill Gatten ran away and bought some island nation never to teach the PACTrust to another soul. In the meantime, Sammy, you just don’t get it.

Re: PACTrust Glitches Revealed! - Posted by dewCO

Posted by dewCO on November 13, 2000 at 23:36:17:

No one can explain something they don’t know or understand.

I agree Sammy! - Posted by Ben

Posted by Ben on November 13, 2000 at 21:27:40:

The straight Land Trust is easy, fast and it WORKS!!!

Ben

Sammy Sammy Sammy - Posted by phil fernandez

Posted by phil fernandez on November 13, 2000 at 19:30:46:

Sammy,

You keep on mentioning , and I’ll quote you here, " my realtor", eh this realtor fellow, you say he has been in business for 29 years and I believe you. But do you not understand that in that 29 year span he has been listing houses and selling houses to buyers. He is a salesperson. What makes him an expert on creative financing.

Why do you think this salesperson is a god. What are his credentials and please don’t tell me he belongs to the local board of realtors. That would be too funny.

I hate to see a guy like you get brainwashed by the “establishment”. I guess I haven’t done that so it can’t be done. You have obviously found this site, but have not utilized it for your own benefit. My challenge to you would be to open up your mind, your realtor is just that, a realtor. Come to the CREOnline convention in Atlanta Mar 30 - Apr. 1 , 2001 and have some fun and learn how to make the money you deserve.

And finally, for yourself, dump this realtor guru of yours, for your own good. Good luck.

Listen to your realtor for all investment advice - Posted by PBoone

Posted by PBoone on November 13, 2000 at 19:27:46:

Then you can put 20-30% down on every property and us real investors can continue to make a killing off the investor wannbe’s
Pat

Re: PACTrust Glitches Revealed! - Posted by Bill Gatten

Posted by Bill Gatten on November 14, 2000 at 17:51:09:

Rob,

Why do you say that? California is only our leading state because I live here and this is where the PT started. We have done hundreds of transaction in Hawaii, dozens in other states (only been marketing out of state for two years), and we just opened an office in Florida because the market for our product there is excellent. We are doing two Florida workshops in December and another two-day seminar in February (as well as a presentation at the Jacksonville Investor’s club). Your state is ripe for what we do. Marty Weisberg, a regular here on CRE, is our new licensee in Florida (Equity Consultants of Florida) and is doing a sizeable amount of business there already.

Do please understand that the PT is only as complicated as one wants to make it. My entire sales pitch is this:

“If you’d be willing to keep your current loan in place for a while, I’ll take it over and cover 100% of your payments, all upkeep and all other costs until I sell or refinance the property and pay off your loan in a few years. You can keep your equity, which will be paid to you when I sell”

The PACTrust is not something you sell, it’s the system you use to best protect all parties AFTER the sale, and as vehicle for getting much more cash and higher payments from a tenant buyer by being able to control tax benefits. Any proponent of the system would/should have studied it enough to know how fast the car goes; that it gets better gas mileage; and that it has superior frame construction: but in actuality, the car buyer generally only wants to know that those benefits are real, worth the money, safe and that he needn’t be concerned about any hidden dangers.

It’s after you have made the sale, Rob, that you use the PT to ease the seller’s (or buyer’s) mind about how they will be protected from those things that might be on their minds (non-payment, physical damage, legal actions of the other party, due-on-sale violation, etc.).

The system is not for flips, assignment or straight purchases necessarily…its for those who need a better way to do things they can’t do otherwise.
If I were to run across a seller who would rather do a lease option, contract or a wrap, then that’s what I’d do. But candidly after understanding how the PT works, I’ve never had anyone who would prefer something else (and we’re talking quite a few folks here).

Bill

Re: PACTrust Glitches Revealed! - Posted by Brian Mac

Posted by Brian Mac on November 14, 2000 at 08:51:16:

J. Goodsen,

Excellent post. And this being probably one of the most open-minded forums on the planet pertaining to creative finance; can you imagine what adversity, or cognitive rigidity, Bill has put up with over the years? It’s almost funny how, recently, many PACTrust naysayers that provide no basis for their accusations whatsoever, are stating they can’t do a PACTrust, but have no problem doing a land trust when obviously, in fact, the PACTrust is a land trust. Not really funny…sad is more like it. Makes you wonder exactly what they’re reading…if anything.

Brian Mac

Re: PACTrust Glitches Revealed! - Posted by Houserookie

Posted by Houserookie on November 14, 2000 at 06:57:25:

Ditto!

Another factor is “who” is it that is presenting
the creative financing.

It’s hard to explain something that you don’t
understand.

Not everyone that buys a McDonalds ( tm )
franchise succeed. Some people are just
not cut out to do business. They expect
to wake up one morning and have no money
down deals come pounding on their doors.

: ))

Austin

Re: PACTrust Glitches Revealed! - Posted by Rob FL

Posted by Rob FL on November 14, 2000 at 20:19:40:

Some points well taken. I have read your book and visited your site so I know you do operate some outside of California. I’ve even used some of your ideas on several deals.

Maybe things are changing and I am not aware of it. Maybe it’s the economy. I just can’t seem to find any sellers that are interested in a creative offer unless they are very motivated or are an investor themselves. (Not that there aren’t a ton of deals out there to be made still.) Maybe the unmotivated non-investors are more open-minded than I realize.

Re: PACTrust Glitches Revealed! - Posted by Bill Gatten

Posted by Bill Gatten on November 14, 2000 at 23:01:22:

Rob thnks for the post.

Re motivated sellers…that all we deal with. That’s all we teach. Unmotivated sellers are…well…just unmotivated. Our philosophy is: Why mess with them when they rule the world? There are plenty of folk who need us and ut our value right up there with air.

And unmotivated sellers are NEVER open minded.

Bill