One Good Reason Why Real Estate Investors Should Keep Their Names Out of the Public Records

Many of my readers ask me why it is important to stay out of the public records if you are an investor. One important reason is to avoid nuisance suits. An excellent way to accomplish this is through the use of a Land Trust.

Now let me state at the outset that I am neither an attorney or a CPA. You should always seek your own counsel in these matters.

Having said that, what is a Land Trust? Essentially a Land Trust is just a piece of paper. It is a piece of paper which spells out an agreement between a Trustee who hold legal title to a property (this is the person or entity that appears in the public records) and a beneficiary who receives all of the benefits flowing from the ownership and use of that property.

A Land Trust will not protect you from liability. However, as a practical matter it may have the effect of protecting you from nuisance suits. Land Trusts can be used in every state.

There is an excellent book by Mark Warda who is an attorney that specializes in Land Trusts. I have heard Mark Warda speak on numerous occasions. I also own several of his books (and have read them more than once). He has a general book on Land Trusts which you can find on Amazon as well as a book on Florida Land Trusts. Both are excellent.

Stay Away From War Zones Unless Management and Cash Flow are Your Only Game

Stay away from "War Zones". Unless you know what you're doing.

A War Zone can easily be determined by driving through (quickly) on a Saturday night. Are there police throughout the neighborhood? Are there frequent shootings? High crime? Drug running and gangs in the open? Multiple cars parked in the yard--some on blocks? This is a war zone. You would never accept cash for the rent in a neighborhood like this.

Most of the houses in this area are rentals. These homes can be bought dirt cheap, but you better hire someone to collect the rent, and you better plan on chasing after the rent every month. Also plan on major damage when tenants move out.

Who should invest here? First of all unless you have LOTS of experience managing these types of properties stay away. Your best bet is not to own them at all! That's not to say you can't make a really good living in these areas. You absolutely can! These units are cash cows. But why be in the chain of title? And why tie up valuable resources?

If you want to make money in War Zones rather than focusing on owning properties, focus on controlling them. Offer a long term master performance lease to a burned out landlord. Perhaps with an option for you to buy later. Then get your feet wet with very little risk.

Just know that while these properties do throw off lots of cash flow when properly managed, they will never appreciate by much. You would never want to try to "flip" or "rehab" a property in a War Zone.

Maintain a very strict but fair policy with your tenants. Work with the local municipalities, the police and local urban renewal groups to help revitalize and clean up the area. Run thorough background checks of prospective tenants! Do it right and your tenants will provide you with a good lifestyle. Do it wrong though and you're in for a world of hurt.