Protect Your Own Assets When Investing
In case of buy/hold/rent a home under my name, if I am facing with behind payments due to tenant problems, and might be losing the income property, can lenders go after my first home. Is there a chance that I can lose my first home?
I read other postings that one can put income property under land trust, or evening living trust, LLC, in order to protect your own assets. CAn someone share best practice especially in CA?
What are the costs of using those vehicles to protect your assets&credit from creditorst?
Hi James,
With regard to losing your first home, it is not very likely. Most foreclosures in CA are non-judicial foreclosures (in the form of a Trustee's Sale) where there is no deficiency judgement. CA does allow judicial foreclosures but they are much more costly and timeconsuming for a lender. Furthermore, there is a one-year period of redemption after the sale which tends to reduce the price realized at a sale. Judicial foreclosures increased when property values were dropping but I suspect they are pretty rare in this market.
Also there are some loans that are non-recourse loans (lenders cannot seek remedies beyond the sale of the property). Purchase money loans from banks and seller carry-back loans for properties up to 4 units if you occupy the property are non-recourse loans. These remain non-recourse even if they are converted to rental at a later time.
Regards,
Ed
Have you thought of selling your home to an investor? I would think that if you listed it on this website, that you might have a few people who are interested. I see many people from CA writing comments... Perhaps they might be interested. If you were in MN, I would ask you to contact me, but I have yet to go that far...
Good luck
Thanks again Ed.
Now to protect one's credit, I guess LLC, living trust, and land trust might be the way to go?
To webuyproperties,
No I don't have property for sale at this. How is MN market doing? CA is just too hot right now to get in. I guess I missed the boat 2-3 years ago.