I am considering supplying the funding while my stepson does the rest of the work in doing Lonnie deals. I’m wondering what might be the best way to do this. I do not have my dealer’s license and my state limits me to doing 7 deals a year without it.
Option 1- Have him buy in his name and then put 2 liens on the MH. One in his name and one in mine.
Option 2- Put everything in his name and have him just pay me back with interest.
Option 3 - Put the title in his name until transfer to new owner, then put 1 lien (mine) on the MH.
I am receptive to any and all suggestions or comments.
Here is what I would do. Have your step son purchase the home with your money that you loan him. You can have him sign an unsecured promissary note for the amount of the purchase, rehab materials and carrying costs (lot rent, utilitis etc). Just guess a good amount.
Then when he sells the home he will collect the down payment and create a note. Then purchase the note from him for a little over what the basis in the home is. He will then pay back your unsecured promissary note with the proceeds of the sale. You have a discounted note and he has a very low taxable event (almost nothing if he sold it to you for maybe just $100.00 over the basis). You could then split the note payment anyway you want.
If you have read DOW I believe Lonnie goes over a couple of different ways of doing this. One pro for this is that your son alway has a higher authority figure when dealing with a seller or a buyer. He can always say that he would love to do what the seller or buyer wants but that the investor (you) will not allow it how about …(fill in the blank). Other benefits are a lower taxable event since he does not receive much profit and you get to strech the taxes over the time period you are collecting on the note.
You can do your first 7 deals this way then you can flip it around and do 7 with him being the investor and you purchasing the homes. This way you can do 14 deals with no worry about the dealer license.
Good luck with your investing and I hope this helps
Ruben D. Flores
816 918-9041
Without knowing which State you are referring to, I can only answer in a general framework.
States recognize corporations as separate