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Randy Hughes Encore

Episode 28: How to Use Land Trusts to Protect Your Assets & Keep More Money

Randy Hughes (Mr. Land Trust) has written extensively for local and national real estate publications. He has taught real estate classes for many years at the University of Illinois, Parkland College and Elgin Community College.

He teaches classes on how to use land trusts to protect your assets and how to become more private with your personal life. He also teaches Land Trust law and administration, authors the only Land Trust Newsletter and Blog in the country, is the founder of the Land Trust University.

He has written Privacy and Asset Protection books as well as home study courses. Randy’s most popular publications are his Land Trusts Made Simple!® home study courses and live seminars.

What you’ll learn about in this episode:

  • The mastermind trip that Randy and Mitch are both involved in
  • Randy’s background and how he got involved in real estate
  • Matching up your goals so that your life looks the way you want it to
  • The niche and location that Randy focuses on
  • Why Randy only invests in just his state
  • Why everything in real estate is predicated on your ability to assess value
  • Why your success as a buy-and-hold person comes down to your ability to find great managers
  • Why flipping properties is not as easy as it seems on TV
  • Randy’s 50 Reasons to use a Land Trust report
  • How to use land trusts to protect your assets, and keep more money as a result
  • Why you should use Land Trusts to get titles out of your name
  • Why you shouldn’t become partners with anyone — you can do business together — but don’t become partners
  • How Land Trusts help from a personal safety standpoint
  • How Land Trusts give you the same tax benefits of owning property without a lot of the out-of-your-control risks that come with owning property in your own name
  • The classes Randy and I are teaching in Los Angeles in February
  • Why buying options is a great opportunity in real estate
  • The great book that Randy is currently reading that is changing his life
  • What’s next for Randy

Resources:

Transcripts:

Mitch: This is Mitch. And welcome to the Real Estate Investor Summit podcast. I am your all-knowing-and gracious host, Mitch Stephen, a.k.a be-the-bank-Mitch-Stephen, and we have a tremendous guest, his name is Randy- Mr.Land Trust- Hughes and this guy has forgotten more about Land Trust than most of us will ever know in our entire lifetime. It is a wonderful tool to have in your tool belts, and he’s gonna tell us about, who-what-where-when and why Land Trust and so without further ado, Mr. Randy Hughes, how are you doing today?

Randy: Great, Mitch. I really appreciate you having me on this Podcast. This gonna be a lot of fun, am looking forward to for a week or two since you first came in the invitation. So, let’s get right through it, I know everybody’s listening gonna work for meat and we need to give them meat. 

Mitch: There you go, meat on the bone. No fluff here. So, the—

Randy: [CROSS TALK] people on this podcast–

Mitch: So people, Randy was one of the guys that went to the Cancun mastermind system, boy do we have some fun, didn’t we, Randy?

Randy: Oh my gosh, I would recommend anybody and everybody who had an opportunity to attend that should do so, and for next one, I’ll assume it will be probably next fall sometime. Probably, we’ll be notified here a few months by then and send [INAUDIBLE] by organizers function.

Mitch: Yeah. So, just a quick overview for those who don’t know. There’s a handful list go on vacation, and we just let everyone out there know where we are going. If you wanna go there, and hang out in the pool or go to the buffet, or whatever, we’ll gonna be there. There’s no seminar, there’s no real agenda, there’s no really anything, there’s anything planned. We are just a bunch of guys that are [INAUDIBLE] in real estate and love to talk about it. We’re gonna be there on vacation and we invited everyone to come if they wanted to. Bring your spouses or whatever. And we had 40 people show up about a month ago in Cancun and we stayed there for about 6 days– 6 nights, 7 days. And it was really a nice place. It was a blast. 

Randy: No selling. 

Mitch: There was no selling. It was nothing. There wasn’t a meeting. You didn’t have to spend your days on seminar. There was no form of classroom, there was nothing, we’re just 40 people in the pool having a good time, meeting for dinners, meeting for lunch, go on buffets, lying out in the sun, lying out in the beach. Some people went and saw the pyramids, some people went parasailing, some people went hiking, some people went scuba diving. In anyways, we all broke up, we go away and we come back and believe me, though I don’t think there was a second, we weren’t talking about real estate down there. I don’t think there’s 5 minutes that we weren’t talking about real estate. 

Randy: That was a blast. I can’t wait to go back. 

Mitch: Okay. So, Randy, take us behind the curtain, give us some context here. How did you get started in this business? Give us your background and let people know who you are. 

Randy: Okay. Well, I live in Illinois. And all my investment properties are in Illinois. I started buying houses when I was 19 years old, I was in college. I studied business in college and my initial interest was to buy apartment buildings, that was the concept that I developed in business school, but the problem was, my father was an alcoholic, he deserted our family when I was 16 years old, we lived off at ground beef at 19 cents a pound, for quite a while, until I got out of college. So, I didn’t had much money to go buy an apartment building with. But, I have been saving my money. I used to collect pop bottles back in the day when you get 5 cents for a pop bottle and collect those, and take newspaper out and save and save and save. There was a house at the corner, behind my house that I grew up in. There was a little 800 square foot, 2 bedroom 1 bath ranch on a [INAUDIBLE] garage and the guy who owned it was a veteran, and that was back in the day when you could assume that a veteran’s loan, even though you were not a veteran, because I was not. For $35 fee, I assumed his loan and cash him out for the difference which I remember around $800, which was every dime to my name, and I’d say since time began. 

Mitch: [LAUGHTER]

Randy: I was a college student and I was running the college students. I had an opportunity to pick up another house, and I used the first house as collateral for a loan to get the down payment for the next house and by the time I graduated, I had 3 houses and then I bought a small office building and rented to an insurance company that I worked for upon graduation, and that was the just the beginning of my investment career in real estate but I bought the houses because they were cheaper to get my hands on, the rest are down payment, then the apartment buildings, we’re a step close to my perception at that time, and after graduation I continue buying houses, but I worked for this insurance company and my wife worked at the bank. And then she worked selling real estate and we just kept buying houses and not taking any money out, because we didn’t need to. We were living off our jobs, and taken all the extra money, instead of buying motorcycles, snowmobiles and shot guns and things that depreciating value. We took every extra dime we can put our hands on and bought more houses. And we just kept doing that. 

Mitch: So, how does it take for you to go from being stable, being financially stable like you can pay your bills, from doing from being stable to being financially free where you don’t have to a job. 

Randy: Well, you know, this is not gonna impress anybody, Mitch. But, there– we invested for 20 years in houses before we took them buying out. And it was because we have certain goals, we want to reach certain levels of how many houses and net worth, and that sort of thing. And you know fortunately, we were able to earn money doing other things. And we didn’t lived off the houses. We were still buying and hold tight people, at least I am now. My wife has passed and so am still carrying out that certain philosophy. And so, we just lived 20 years in investment and do it. But, my gut should certainly has paid off and allowed me to have the lifestyle that I have today. 

Mitch: I noticed that you moved pretty freely about the country, my friend. I’ve noticed that about you. If you need to be in some place, you’re just there, aren’t you? [LAUGHTER]

Randy: Well, that’s true. I mean, I go somewhere pretty much every week. You know the California, or Cancun or Florida or somewhere for a 3 or 4 day weekend. Because, I like travelling, you know, to me one of the benefits of investing in real estate and getting–choose what you wanna do. And if you want to sit over and read a comic books and so be it, enjoy that. If you wanna travel and see the world, then do that. Whatever that interests you, those should be your goals that you should be working for. And that you are putting all the sweat and equity into these properties to eventually take out and live off them. 

Mitch: So, I heard your niche is the buy and hold strategy that– is it houses, is it apartment? What is it exactly is your niche?

Randy: It is houses, generally 2-3 bedrooms, a bath and a half, 1 to 2 car garage, about $80,000-$250,000 range. 

Mitch: Any particular state or city?

Randy: All in Illinois, where I live. I’ve never been able to be smart to courage enough to invest in other state. I’ve known a lot of people who did. My mentor did. He had properties in 27 states in his career before he passed away, with only properties in the state of Florida where he lived. Because, he said it was too many risks involved in investing out of state. Now, I understand that. I had difficulty determining value in certain areas in my city while am trying the true value of something in entirely different state. I mean real estate is obviously not a national market, it is local. And it is almost neighborhood by neighborhood when you are determining value. 

Mitch: The number one asset that we have as real estate investors is our ability to accurately assess value. Without that ability, if you don’t have a neck for that then the whole thing is not worth it that much, because everything is predicated in your ability to assess value. 

Randy: Well, I agree with that, and especially when you are buying but, if you are gonna be a buy and hold person. The second most important thing is management. Because, I don’t care how good the deal you’ll get, you can still lose money in this game if you don’t know how to manage property or if you can’t find a professional manager to do it for you, which is extremely hard to do. So, management is my mind is really the key to success in buying and holding real estate long term. 

Mitch: Yeah. It’s hard enough to find one management company and still have to go find one in every different state, right? And there’s also, the problem of there’s different laws in different states, so you like to know all the different property codes for different areas. So, I know people that buy virtually all over the place, but they usually just flip or wholesale these properties right away. And I have students myself, that live like in Los Angeles that deal in Atlanta or deal in Houston or deal in someplace else that has more favorable pricing, more affordable houses, and have better laws. They’re not so liberal like in some other states. So, they can’t do what they wanna do in their state. But, what they have in common is they pick one city and they start building reputation there. They have their roots on the ground there. They get to know the economy there, the culture in that city, and the pricing, I mean. So, am with you. I pick one city and go there and do the best with it, you know. So, tell me what is the most common mistakes you see in the investors around the country is making.

Randy: Well, I think you know, you hear about a lot of people buying and flipping and I’ve done it my life but I don’t do that much anymore because unlike all these television programs, that make you think that is easy and “Oh, it’s possible to flip a house”. You can lose your stocks when you are flipping a house because 9 times out of 10, your estimate is never right not unless your estimate for repairs has never right. You always run into hidden problems that you couldn’t tell, until you tore that wall out. There’s just so many unknowns that I think, especially a new investor can get burn out, trying to flip the house, and I would suggest anybody listening this podcast, if it is a new investor, don’t do it. You may be partner up with somebody who has done 10 or 20 houses, or pay them to let you follow them around, let them be your mentor. Because, that will be hell lot of cheaper, than losing $50,000 or $100,000 on rehab. There’s always risk involved, you know, because there’s always some [INAUDIBLE] that falls off the roof and sues you because we all know that they are independent contractors that fall off roof. Somehow, miraculously turn into an employee before they hit the ground and must receive their pay, you are really in trouble. 

Mitch: [LAUGHTER]

Randy: So, be really careful on flipping houses is one key piece of advice.

Mitch: Okay. I think that people need to know about the Land Trust and how you were using them in the creative real estate game. I mean, you have a report called, 50 Reasons to Use a Land Trust, is that right? 

Randy: I do. I do. And if anybody would like that for free, do you mind if I give out my email address? 

Mitch: I have the link right here, that we’re gonna use, it’s reinvestorsummit.com/ltms, which stands for what?

Randy: Land trust made simple. 

Mitch: Okay, that’s

that stands for land trust made simple. Okay and you can go there and get that free report, 50 Reasons to Use a Land Trust. But, let’s start off, is there some kind of threshold that new investor or young investor has to cross before he starts using that Land Trust? Or should he use one starting right out in the game. 

Randy: Well, I wish that I learned about this trust before I bought my first property. Because, then my name would have never been in the chain of title. I probably had 15 houses in my name personally before I woke up to realize how stupid that was, and now anybody can just look at the county records and see everything I owned, what do they were assessed for, what the debt was and the proximate my net worth, and that is really really dumb. And it makes you a target for a lawsuit for this contingency lawyers, who are prowling the waters every day, looking for somebody to sue and make [INAUDIBLE] But, I realized that many people on this call, probably already have real estate in their name, it is still their benefit to get it out of their name, because as Mitch has said, there are 50 reasons to use a land trust, that’s a lot of reasons to use this trust, besides the one getting it out of your name. It is important to learn how to do this as soon you can in your investment career and then you’ll be taking titles directly from the seller to your trust, and you will not have your name on the title or in the county records, and that’s–we are talking about asset protection. 

The first step of asset protection is privacy. And the first step in privacy and the cheapest step for a real estate investor is not owning real estate in their name. There are no benefits, Mitch. The only real estate in your name, you get the same tax benefits if it’s in the trust, and there are no loss of benefits by not having it on your name, you get everything the same in the trust, so if it’s the case, why bother having them in your name, there are only negative associated with owning real estate. Then, take those negatives away, and hold it in a title holding trust for you.

Mitch: Yeah. That’s worth–when you put your property in Land Trust, first you have to have a beneficiary, who is the recipient of the beneficial interest, notice that I didn’t say the detrimental interest, instead the beneficial interest. You know, I’ve been using Land Trust for 20 years and when people ask me why. I can give them lots of different reasons. I don’t think I can give them 50 reasons, so am interested to see this report myself. You know, one of the things I say, depends on who asks. If it is an attorney asking me, why. I tell him it is for safe planning reason, you know, and that’s one. But, really the number one reason for– I use it for, is what you mentioned is unanimity, I don’t want someone to be able to type in Mitch Stephen in a computer and all the houses that I own. I mean, I just become a target. 

Randy: Oh, man. 

Mitch: And I just wanna– they basically was you know, just extorting. That is the same as [INAUDIBLE] and see if he’ll pay for us to go away, ’cause he got the money obviously. The other thing is ease of transfer. When I wanna wholesale a property, and am dealing with people that I know, and that know me. I can just say, “You know, instead of go and get a new title [INAUDIBLE] why don’t I just transfer the beneficial interest with the money in my account and transfer 100% beneficial interest to you and there you go, you didn’t have to move anything at the title and you don’t have to have any filing fees and am not sure about this, I think the title from that stay in place, but maybe that’s why sometimes, title companies give you hard time, ’cause they think maybe Land Trust circumnavigate their ability to charge you over and over again for transferring the property. So, what are still the other fantastic reasons to do this?

Randy: Well, certainly to avoid probate on your desk is a great reason. To make an LLC the beneficiary of the trust, you know oftentimes, when I tell people I use a Land Trust, they take it against the LLC and Corporations, that’s not true. I just don’t hold title in those entities, because LLCs and Corporations can be found in the public records. There’s no public record of a Land Trust. No registry. No registered agent. No tax return. No tax ID number. That’s the last entity on the planet earth that is being tracked by the state of the federal government’s. And that to me is extremely important in this day and age when it is almost impossible to have any sort of privacy of anything. So, it is a wonderful tool that you can create yourself. You don’t need a lawyer to do it for you. And once you learn how to do it, you’ll create Land Trust for the rest of your life at no cost. Because, it doesn’t cost anything to establish a Land Trust. So, it couldn’t get any better than that. 

Mitch: It is just a template, take a blank template and you fill it out for the next property, right? So, you said it, on your death to avoid probate, all you have to do is make sure that you name a successor beneficiary, right? 

Randy: That’s right. As long as you got a successor beneficiary upon your death that interest will automatically accrue to the successor and then they’ll step in to your position immediately upon your death. Whereas, if you go on a deed with your name and you die, that deed is gonna be transferred to your heirs until your estate is settled and then it goes to a probate, which can take 6 months to a year, some legal hassle and legal expense and so, if you want your heirs to get, to get hold of your assets quickly, use a trust. 

Mitch: And so, am very interested in this other concept, that you stated when we were in Cancun, you were talking about it and then I started to recite it and I broke down and I couldn’t recite it but, in the– let’s say I have a business partner, we went and formed the LLC together so we could buy houses and sell those houses with owner financing, and you know become the bank. How can I use a Land Trust to protect myself in case my partner gets in trouble and gets a judgment when he gets in. Am I at risk here? You see where I am going with this?

Randy: Yeah. I do. Well, first of, Mitch. Let’s make it clear to everybody listening you should not be a partner with anybody on the planet. Not your investment buddies, not your wife, not your significant other, because when you take on that term with partner that means, you are liable for what they do. And I don’t know about you, Mitch. But, I have enough trouble with being liable for my own actions, let alone be liable for your own actions. 

Mitch: [LAUGHTER]

Randy: Well, I just think that you should not be a partner with anybody. Now, that doesn’t mean you can’t do business with other people, it just means, you shouldn’t be a partner. So, for example, you follow the Land Trust, you put a piece of real estate into it, and the beneficiary of the Land Trust, would be, let’s say you and I are doing this investment together. You can make your LLC a fifty percent beneficiary and I can make my LLC a fifty percent beneficiary. Now, if my LLC had no other assets in it, that would be okay with me, because, if anything happens, from a liability standpoint, I don’t want my LLC–other assets in my LLC to be affected. If I did have other assets in my LLC, and I didn’t want to use it directly, I would form a personal property trust just for the purpose of being a co-beneficiary with you or your personal property trust. That way, our personal property trust are partners as beneficiaries of a Land Trust and the only asset in that personal property trust is the Land Trust beneficiary. I know we are trying to get deeper here, maybe it is a bit hard to follow this over the phone as opposed to being diagrammed out. Just think of this way, you don’t wanna go on a deed with anybody, because when you go on a deed with somebody, you are subject to their actions. So, if they go and run over somebody’s dog, and they get sued for million dollars and the judgment file and hit them and all their assets, that’s gonna be against the asset that you own jointly with him. And I got firsthand experience with this. I’ve got a friend of mine I invested with, fortunately using a Land Trust, that I just described. And just last year, he had a $3.2 million judgment file in my county where I live, looking for assets that he might own and I insisted putting this property into a Land Trust, I would have lost all my equity for the last 35 years, we’ve owned this property, because of something he did, and you know, he think that through and he lived 20-30 years in this business and lose something because of somebody else’s actions, that’s a depressing day, Mitch.

Mitch: Yes. That will be horrible. I understand that, if you really wanna be partners with somebody then put the property in trust and tell me if this is right. And also, I wanna put, we are not lawyers and we are not attorneys, this is our life for better or for worse, and you know, you just considered that you need to talk to your own attorney to make your own plans but, based on our experiences, this is what we do. It doesn’t mean that you need to do or should do, you understand the disclaimer yourself. We are not licensed attorneys, and we are not CPAs, or you know seek your own professional advice. But, if I am going to be partner with somebody, I’ll put property in the trust then their company or they personally can be fifty percent of beneficiary and my company will be fifty percent of the other beneficial interest, or whatever the breakdown is, thirty-forty, forty-sixty or whatever. And in that way, if they run out and kill somebody, get drunk and kill somebody in the car accident one night, they can’t flip a judgment against that Land Trust, right?

Randy: That’s right. They can’t put a judgment against the property that’s in a Trust and furthermore, you don’t have personal liability at a beneficiary level because you are not partnering with somebody on an individual basis. Your entity is partnering with somebody and there’s a huge distinction there. 

Mitch: I personally use that LLC to be my beneficiary and I actually use a series of LLC so, I can break it into different basket sizes, you know what I mean?

Randy: Yeah.

Mitch: And I don’t know if I they have that in your [INAUDIBLE] but they do have series of LLC in Texas and in Atlanta, I think. 

Randy: Yeah.

Mitch: I mean in Georgia. Okay. So, when I first went to change over. I was doing business in a certain way. I had all the properties in my corporation’s name or on my LLC name and then I learned about Land Trust. I went to put everything in Land Trust, and I thought it will be really a big deal, and it really was. It was really easy. Just refile, you know like moving asset in the trust, by the way, it is against the law to disallow to put anything they want in trust, right?

Randy: Well, probably, we should clarify that. If you are talking about your personal residence, yeah, there’s a federal law that allows you to put your personal residence into trust without that triggering to do on sale, if you got a lender. If it is an investment property, then there’s probably doing a sales cost that says, that if you transfer to a private lender could call on the loan deal. My experience is either they don’t know if it’s been transferred or don’t care if you are using a local lender. I just go and talk to local guys and tell them am doing some mistake lending, I wanna put in trust. And every one of them said, “Okay”. But, if you are dealing with you know, Chase and Bank of America, those big boys, you might have more of a problem in that regards. 

Mitch: That’s a good point. ‘Cause I was using private lenders. So, my private lenders didn’t care. 

Randy: Yeah. Right. 

Mitch: The other thing was, I wanted to point out to the listeners is, you know, my office started dreading, “Oh, we’re gonna have to do this now on every deal. And every time he comes out”. And so, like for the first 2 deals, they were all kind of huffing and puffing, and no office that likes change, they get into their routines, they don’t wanna change. And then after the second deal, it was like, “No problem, just became part of the routine”. And I’ve been doing it for 20 years ever since, you know. It is really phenomenal to have. Tell me what are your favorite stories about how a Land Trust helps a person. 

Randy: Well, I can talk all day about that. But, one of my favorite story is– it was– it occurred last year, when I had a lady landlord from Florida called me. And she said, “Randy, how can I get your home study course fast”? And I said, “Well, what’s the hurry”? She said, “I own 8 rental properties down here in Florida and my own personal residence and one of my tenants is a man and he is interested in me, and I am not interested in him”. And I just got a call from one of my tenants that this man showed up at her door looking for me. And she said, “I got to get out of this stuff out of my name”. Because, what he was doing was obviously, he was stalking her going from property to property, that he found easily on the internet, because she owns the property on her name, and he then eventually, he find her personal residence, and that is really really powerful,Mitch. Because, you know, I always put Land Trust from estate planning to privacy, and asset protection and all that. I’ve never thought of it as a safety mechanism. You know to prevent stalking or to prevent someone from finding where you live. If I were a police officer for example, there’s no way, I don’t mind have a house in my name. 

Mitch: Yeah, or a judge or even a landlord. Just a landlord.

Randy: Or a landlord.

Mitch:  I mean, oh my gosh, when you evict people, someone’s gonna be lunatic in there somewhere, right? 

Randy: That’s right. So, there’s a real personal safety issues related to using Land Trust, besides the privacy and asset, and estate planning benefits.

Mitch: Yeah. So, okay. This is really a huge subject, and we can go and on and on, what are some of the bad things that you see happen because people didn’t have a trust. I know this is probably a big, huge question, am springing around you right now. 

Randy: Well, I’ve seen a lot of situations where like, a mother and son. Son’s [INAUDIBLE], mother has a house spring clear for her estate planning purposes, she decided to put the son on the title with her. Well, the son forgot to tell the mom that he owes the IRS, $90,000 in back taxes, so the IRS comes hunting and they find his asset. Mom house because now, his name is on the title and the IRS grabs mom house. She lived in the house forty five-fifty years. He loses the house because putting her son on the title. So, you know it is just amazing the number of ways you can get yourself in trouble by owning real estate in your name.

Mitch: Yeah. The theory is, it is better to control real estate than it is to own it. You much rather have control than ownership, you know. ‘Cause when you control it, “I don’t own it, but I control it”. If you do something bad to it, I can just push it away to a certain degree. You know what I mean?

Randy: Well, what beautiful saying about that concept, Mitch, is from a tax standpoint. The IRS says you do own it, because everything flows through the beneficiary, so you got all the same tax benefits, as if you did own it on your name. But, from a legal standpoint, you don’t own it. You own the trust, so it doesn’t get much better in life when you have a situation like that. 

Mitch: Yeah and so let’s talk about [INAUDIBLE], how does it work? Because, I have all these properties in different trust, I don’t have to have a separate bank account for each one of them. I don’t have to have separate checking account. I have an LLC that’s where the checking account is, that LLC is the beneficiary of all my Land Trust. And it goes at one tax return, you know, that LLC has to do a tax return and it includes all those houses that it is a beneficiary for. And it just falls down under one tax return. You know, we write checks out of one LLC’s bank account for all of the trust that I have houses. It starts as complicated as people think. 

Randy: It is. If you don’t mind I’d like to get a little plug in her for, Mitch. Because, you and I are gonna be teaching a 2 day class in Los Angeles area in February. I am gonna do a day on Land Trust and you’ll gonna do a day on seller financing, right?

Mitch: Seller financing and how to do business from afar. Because, a lot of times in California, you know it is hard to find a portable houses in California, so I–you can talk about, where you might wanna go to do that, how you might do that. So, I am looking forward to that. So, it will be February the 25th, is that when it is?

Randy: I think it is. I don’t have that schedule in front of me, but we’ll certainly be letting everybody in our database, we’ll be sending promotional material on that very soon. 

Mitch: Okay, Randy, here’s one for you. If I gave you $20,000 to invest in real estate, what would you do with it and why?

Randy: I would buy option, especially if I was in, or I could find a rising market, I would spread that twenty grand as far as I could, to buy as many options on single family houses as I could. And what that means is, to give you an example, I had a friend once that was complaining to me about his high utility bills, and he said my money is just going out of the windows, because I have really poor windows. And I feel what would cost you is– buy new windows, and he said,”$3,000″. And he said, “I don’t have it”. And I said, “What if I give you the three thousand, for an option to buy your house 5 years from now, for what is worth today, and you can go buy the windows, would you do that”? And he said, “Yeah”. And so we did. And the beauty of that is, in a rising market, my money is growing. I have no risks, no tenants, no toilets, no insurance, no nothing, totally half of investment in real estate and I just participate in the appreciation portion of the real estate ownership, which in a rising market. The largest percentage of a return that you’ll gonna get. So, 5 years went by and the guy said, “You know, Randy, I really don’t wanna sell you my house. I know you can buy it if you want to. But, that’s the option”. And I said, “Well, I really don’t wanna buy it”. And so what I did was I said, “Make me an offer”. And he bought my option now. So, in effect, he used the equity on his house to buy windows, it didn’t cost many monthly payments, didn’t go to bank and qualify, he got his windows, he got his savings on his utility bills by using the equity on his house, but he didn’t have to do anything for 5 years, well then he refinanced in 5 years and paid me off, whatever we agreed to at the settlement, and I got a great rate of return and absolutely no management at all. 

Mitch: And the risk, and the risk– because

Randy: Well, the risk is, there are couple of things. If the market is falling, then you may not make anything on your money, and he may said,”Yeah. Go ahead and buy it for $100,000″. It was only worth $80,000 today. And you just disport your $3,000 so you could lose it all, if you got to be careful with if you do this sort of thing. Or if he went bankrupt. Now, I did file a lien against his house to secure my option but you know, he default on that first mortgage, you know, i’m not about trying to protect $3,000 by

paying off his first, unless you know there’s tremendous amount of equity in the property, and then I will do that. But, you can do that, you use that concept on new roofs, new car, college education, whatever people need money for, you can buy an option on their house, and solve their money problems and you get an option. 

Mitch: Very clever. Very clever. As a successful investor, I know that we just never stop learning, do you have a mentor right now that you use?

Randy: I don’t anymore. I had one for 40 years, and he died. His name was Jack Miller, the people on the call may recognize that name. 

Mitch: Well, he coaches his name was Jack Miller, but I don’t think it was. [LAUGHTER]

Randy: My guy in real estate, and I learned an awful lot from him. And there’s– and yeah, he is gone now. 

Mitch: Are you reading a particular book right now?

Randy: Actually, I am. And it is called, Younger Next Year”. It is written by a doctor and lawyer, odd combination. And basically the premise is, with a few pick up your exercise program to 6 days a week, you know, cardio and weight bearing, you’ll actually be younger next year, a year from now than you are today, because you’ll be more healthy. You’ll physically be younger, because you are more healthy if you exercise 6 days a week. And I always exercise 5 days a week, probably for the last 12 or 15 years. Once I started the book, I pick it up for 6 day a week, because, I wanna be younger next year, Mitch. 

Mitch: [LAUGHTER] All right, when you talk about this proverbial next level, what are you inspiring for, what’s next for Randy Hughes?

Randy: Well, you know, I am on a point in my life where I am trying to enjoy the fruits of my labor, so you know, I don’t need to buy another 20-50 houses, I need to do a good job in maintaining and managing my houses, and seeing that they continue to grow in value for, not only for myself but my children and grandchildren, but those are my goals, you know. My goals are to provide guidance, not just money but guidance and education to my children and grandchildren. I have 2 daughters, both of my daughters and both of my son-in-laws, have come to my basic land trust course, and they’ve gone through my advance land trust course, and they have copies of that material in their safe, in their homes as resource reference material, because, you know, if gonna learn how to use this trust, you need to teach your children, because they are going to be the beneficiary of the trust. And so, I think it is important that you teach your children as you learn how to use this trust. 

Mitch: All right. Last question and we’ll gonna call it a day, Randy. What has been the most liberating aspect about becoming successful?

Randy: Freedom to travel, I love travel. I love hotels, airplanes and airports. I enjoy meeting new people wherever I go and so, it has allowed me to travel pretty much wherever I wanna go, when I wanna go and to me, that’s pretty good lifestyle. 

Mitch: Freedom of movement, that is one thing, being financially fit will absolutely will do for you. All right, I wanna thank you for coming on. If you guys are interested in learning more about Land Trust, Randy-Mr.Land Trust-Hughes, I want you to go to

, make sure that’s all lower case,

, land trust made simple, all lower case. And one really unique thing about Randy’s offer is that, when you sign up with him, you’ll get his phone number for a year, and you get to personally call him if you are not understanding when you are going through your first couple of transactions, it might be nice just to talk to the man himself and get it right from the horse’s mouth and you’ll have that ability with Randy, he is a great guy, knows a lot about Land Trust, you really need to look into it. I’ve been using Land Trust for 20 years. Thank you so much, Randy. It’s been my pleasure, and I know you got things to do, so am gonna let you cut loose here. 

Randy: All right. Thanks, Mitch. I appreciate the opportunity, we can get hold of the circus, and we can both hold and save a lot of money and a lot of aggravation in this business. Take care.

Mitch: All right. Thank you so much. This is Mitch and we are out of here. 

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