Real Estate You Need to Know: Forms of Ownership

 In this brief article I explain forms of ownership, that is, how you present to the world the fact that you own real property. Forms of ownership have a direct impact on your tax burden, on how you extract money from the deal, and how you protect yourself against lawsuits. Again, this is real-life stuff that you need to know if you want to get rich in real estate.

Forms of Ownership

With any real estate transaction, the new owner must determine the form in which he will take title. The form of ownership is an individual or business choice, depending on personal circumstances. That choice will have tax consequences, and will determine the rights of creditors, heirs and co-owners. Ownership comes in four main flavors, as summarized in the chart below:















The various forms of ownership are controlled by the state in which the real estate is located, but within the constraints of each state the choice among the available forms is entirely up to the buyer. In most states, title could historically be held in one of three basic categories, either alone by one owner (in severalty, or sole ownership), together by two or more people (co-ownership), or by a third party for the benefit of another (in trust). Finally we have a more recent fourth category of ownership in multi-unit buildings under the general heading of community ownership. Under each of these major categories are several variations, each discussed in detail in my book, each explained in a way you can understand and remember.

As a real estate investor, you truly do care about these different forms of ownership. Your goal is to make money when you buy property, and the form of ownership will have a direct, immediate impact on your bottom line. You need to know how these different forms of ownership work to best create a structure that takes maximum advantage of your personal circumstances - taxes, other assets, marriage status, estate planning, and virtually every aspect of your financial life.

For the purpose of this brief article, let's just look at one form of ownership, sole ownership.

Sole Ownership

When title is held by one person (or one organization), that person or organization is known legally as the sole owner, which is both common sense but also a formal legal term. With commercial property, this form of ownership is common, and introduces few complications. The situation with a married couple, however, is more difficult. While different in each state, when one spouse owns property as a sole owner, states generally require that the other spouse sign any documents concerning the property. At first it seems odd that the non-owning spouse must sign documents concerning real estate in which he or she has no interest. But that requirement arises because sole ownership is potentially counter to other laws governing rights to title between married couples. For example, depending on the state, the non-owning spouse would need to release homestead rights to make sole ownership by the other spouse compatible with state law. In spite of the marriage issue, sole ownership is the least complicated form of ownership; as soon as another party is introduced into the equation, the degree of complexity rises quickly.

While all other forms of ownership (listed in the graph above) are more complicated than sole ownership, I explain them all in my book using simple, easy-to-understand language. Real estate professionals try to keep this stuff complicated, but in fact it is not. In my book, I walk you through these fundamental concepts that will make you a true expert. You'll soon know more than your broker. And that knowledge will enable you to find and purchase property that others will never see. Next Steps

You might wonder where my series of short articles leave you. My hope is that you are left with the clear sense that you can learn everything you need to know about real estate in a painless and easy way. And I have intentionally designed these articles to entice you to buy my book. Shameless advertising? Perhaps, but I also think I am performing a valuable service for people serious about becoming wealthy.

My method of real estate investing is successful because it relies on basic fundamental principles. I advocate buying properties that have positive cash flow, with no money down. Yes, that sounds simplistic, but it really works. That is, that simple strategy works if you truly understand the basic principles of real estate. The rate of return is huge, even factoring in the costs of transaction, maintenance and management of the property. The problem with the no-money-down craze of the 1980s is that people bought the wrong properties, leaving themselves with huge mortgages, and negative cash flows. They also commonly overpaid for a property just because they could buy with no money out of pocket. Of course that strategy is doomed to fail. I show you how to buy properties that work well with a no-money-down strategy, properties that not only require no money out of pocket, but that actually yield an immediate return with positive cash flow. The deals are out there, but you need to find them. In order to find them, you need to understand the fundamental principles of real estate.

I have no secret or magic formula. You can spend hundreds of hours of lost time, and lose hundreds of thousands of dollars, in trying to figure this out for yourself. Or, you can spend less than $250 and have the path to success handed to you on a silver platter.

If this intrigues you, and you buy my book, you have one full year to implement the principles and follow the guidelines I present in the book. But be clear: you have to put an offer on a property using my methods before you are eligible for a refund for the cost of the book. That is the only way I can know you were serious about becoming wealthy. Frankly, I am only interested in people who are committed to changing and improving their lives. If you are one of those people, please join me on this wonderful journey to great wealth.

If you want to learn more about Beyond No Money Down, go to: www.realpropertymillionaire.com





About the author:

Dr. Schneider is a recognized expert in building personal wealth, with his best selling books "Beyond No Money Down" and "Trading Futures: Only One Way to Win". Practicing what he preaches, he now lives in a beautiful waterfront home in central Texas, owns and operates his own jet, and travels the world first class giving lectures across the country and across the globe.

 Thomas Kinsey Schneider, Ph.D.

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