OK - START OVER! What About LLC's, Land Trusts, & Quitclaim Deeds?
This is for me, all the other newbies and anyone left over that is still confused. Can a nice senior investor straighten something out for us?
I keep hearing the terms, LLC, Land trusts, and Quitclaim Deeds, thrown around. Although I've got quite a number of bits and pieces to the puzzle of just what these are, I am missing some details and I'm wondering if someone would start some of us out with some good solid basics and a possible good place to look next other than with an expensive attorney.
Here's where I'm at. I know what LLC stands for and that it protects somebodies assets (my assets??) and that for some reason it's a good idea to make it a beneficiary (what's it mean to be a benficiary anyways?) for a land trust. (great, what's a land trust? why would I want one?) Quitclaim deed...hmm...??? Don't have a clue.... 
Kelea:
Nice to meet you!
LLC is a business entity that many investors form because of the privacy, asset-protection, and has a flexibile tax structure.
A Land Trust are simply Title-Holding device used to maintain privacy, buffercate(or lien-proof) the Title, and is usually a tool used in Estate-Planning to avoid Probate, Capital gains from transfer of title...
No need to within an LT B/C a beneficiary can easily assign their beneficial interest in the Trust (namely the Property) without disturbing the the Title which ois held by a Trustee.
The Trustee can be the original owner or another person/entity that they name as Trustee. Personally, I use a 3rd Party Corp. to act as mine if I plan to hold the proprerty longterm.
Lelea check with your Atty/CPA to see exactly what type of asset-protection set up and/or Title-holding is right for you and your RE Investing plans!
Best of Everything to you!
Derrick Ali
Not sure if I'm Nice or a senior investor, but I'll try to help out anyways!
LLC's: Limited Liability Corporation: It is an entity and will be treated as such. It can purchase properties, hold properties, get loans, etc. An LLC is a pass through entity, and therefore anything that is earned by the LLC goes straight to the owners of the LLC. This avoids "double taxation" that Corporations face where the earnings of the company are taxed and then when the earnings are passed on to the owners (shareholders) in the form of a Dividend they are also taxed. LLC's also offer liability protection. For example, if someone trips on the curb they'll sue the LLC. The LLC may be forced to pay a judgement, but they can't go after personal property (your house, car, boat) or anything that is NOT held in that LLC. Many people recommend having one LLC for every property, or one for every 2 or 3 if your properties are houses or duplexes. The regulations vary from state to state. In Utah it's a $50 filing fee to set up an LLC. Most Laywers charge $500-600. They're relativly simple to set up, and you may be able to talk an attorney into doing it for a flat hourly fee and save a few hundred bucks. You can set them up online for $50-$100, but remember, you are doing this for liability protection. If you don't do it right you may not have the protection that you thought you had. For the first one, I'd recommend using a lawer. Talk to them about the differences between single member LLC's and multiple member llc's. You may want to talk to your accountant as well. I've choosen to set mine up as a multiple member llc. LLC's also offer greater flexibility in how they will run their day to day operations. The cannot, however, go public. There's obviously more to be said, but this should cover the aspects that directly affect you and REI.
Land Trusts: Land trusts are NOT an entitly. They cannot buy, sell, or hold anything. It's a piece of paper that has 3 parts:
1. Grantor: This is the person or entity who initially owned the property and moved it into the trust.
2. Trustee: This is the person or entity who can speak in behalf of the Beneficiary. This needs to be someone that you trust (or an entity that you own)
3. Beneficiary: Whoever Owns the property.
The main reasons for trusts (regarding REI) are:
1. Privacy: It's hard to tell who owns the property. This makes it impossible for a lawyer to scour the county records and see that "john smith" owns 43 houses. Instead he would see 43 distinct land trusts with different names and have no idea who owns them. The beneficiary is not recorded and therefore if someone wants to find out who owns the property they must sopoena the trustee to court.
2. Avoid death tax. I'm not the expert on this, but people use all kinds of trusts to pass their assets on via a trust or an estate. You've heard of "estate planning". This is generally done through a trust.
When you set up a trust with property that you own, you, will most likley, be the Grantor and the Beneficiary. If you are buying subject to, you will want the seller to set up the trust (with him being the grantor and the beneficiary) and then have him assign the beneficial interest to you (making you the beneficiary aka owner). By doing this the lender does not see that the property has changed hands. They continue to receive their payments, and never know that someone else now owns the property.
This may vary from state to state, but land trusts (in utah anyways) are extremly easy to set up. It consists of a couple of documents. It's wise to get them notorized, but not necessary, and only one of them is recorded. The whole process takes about 2 minutes and costs $14. If an attorney takes longer than 15 minutes to do it, you're probably being ripped off.
QuitClaim Deed: A deed that transfers whatever interest or title a grantor may have, without warranty. I'll let someone else explain this one in more detail.
For more Info, go to your library, find investment Clubs, and start talking to people.
One more thought....
This is how I'm setting up my entities to hold "apple apartments". They will be transfered into AAA land trust.
AAA Land Trust:
Grantor: Apple apartments LLC (the seller refuses to put it into a trust at close, but that would have been my preference.)
Trustee: "Quality property management LLC" (this is owned by me of course)
Beneficiary: "apple apartments llc" (also owned by me).
I've talked to several accountants and attorneys and they agree that this structure is both wise and common.