Your attorney as well as your financial planner will tell you that it’s never a good idea to buy and hold property in your own name or a family member’s name. When you do, the real estate is considered a personal asset and could be seized by protect your real estate fund into trustsomeone who files a lawsuit against you and you’re on the wrong end of the result. No, it’s important to take title into a separate legal entity.

When you buy and finance investment real estate for the long haul, you’ll seek financing from a bank that approves loans using guidelines established by Fannie Mae and Freddie Mac. These programs provide the most competitive rates and terms for investment real estate in today’s market.

These guidelines allow a lender to approve and issue funds for real estate that will be held in a trust. The trust must be a revocable trust, meaning the trust documents controlled by the trustee have the authority to make decisions on behalf of the trust in business matters.

You can expect however to provide a copy of the trust documents in advance for the lender to review and approve. Don’t expect to have a trust drawn up at the closing table. A trust needs to be established and approved before a lender will approve a loan that goes into a trust. And even that, some lenders don’t fund directly into a trust at all, so it’s important you get that clarified with a lender before you ever make a loan application.

Conventional lenders also prevent corporations including limited liability corporations from taking title to a property. That means if your Real Estate Investment Co. LLC has one of the officers sign a sales contract, the lender will consider the contract void and require and individual to sign a new sales contract and apply for the loan directly.

Holding your real estate in a trust is good advice. Make sure you get the trust established well beforehand and find a lender that will in fact lend into a trust, but the process is a relatively smooth one.