Best Direction Need Your Recommendations
I'm did a stupid thing but now have to go thru with it and need help. I was involved with an organization where an investor buys a property with his/her credit for a credit challanged buyer. Buyer puts up down payment, closing costs, etc. The organization was supposed to handle everything, find lender, handle transactions with seller, set up trust to act as administrator with trust deeding rights of ownership, tax advantages and appreciation to buyer. When I received the paperwork from them, I confronted them on several issues and then received notice 2 days before scheduled closing that they did not want to handle this or any transactions for me. Since I made a commitment to the buyer I sought out and found a lender and negotiated with the seller for an extension.
I'm scheduled to close next week. I'm buying the property then plan to deed it to a trust. I want to administer the trust. The trust will deed the above mentioned benefits to the buyer. I going to have a separate agreement that gives the buyer 2 years to refinance at an agreed to 10% increase over the price I'm paying for the property.
The buyer will send her payments to me and I'll pay the note. Here are my questions. In what name should she make out her checks to? When tax time comes and I send the buyer her interest deduction statement whose name should be on the form? Mine or the trust?
Or since it's obvious I've never done this before, should I approach it another way rather than a trust?
The buyer is aware that I'm no longer going thru that organization.
I also thought about an Installment Option that would pretty much do the same thing and have an escrow company collect the payments and issue the annual interest statements.
I'm looking for the best tax advantages for me as well as protection and easy of eviction in case of default.
I'm all ears! Thanks so very much for your help.
If you place the property in a trust the buyer's payments should be made out to the trust and the trust should then write out the check to the mortgage company out of it's own bank account. The trust should send the interest decution statements, not you personally.
Are you getting the loan yourself rather than someone else? IF YES, then you may consider simply purchasing it in the name of your LLC (no trust) and then selling the property on contract for deed (land contract) to the new people. Check with an attorney to find out the ease of terminating a contract. In iowa, where I am from, it is very easy.
I think I answered all of your questions. GOOD LUCK