203K with Illinois Land Trust

5 Replies

My brother and I are investors in Illinois looking to purchase a multi family with one of the occupants being our parents. Since they will be living there, could they buy the property and put it in an Illinois land trust with my brother and I as beneficiaries? That way, sons pay for the down payment, make the payments, parents are the residents, and sons acquire ownership in the future. Would this work?

Robert,

If I am reading your title correct you are doing a FHA 203k loan? Those would have to be bought by individuals, cannot be bought in a land trust. You can still put the parents on he loan and you gift the down payment to them

Jerry 

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OK, here's a more detailed description of what I would like to achieve. My parents live in a 2 story home they can no longer maintain. They live off of SS and Medicare and have very little savings. My brother and I, however, have learned from their mistakes and have saved enough to purchase several properties. The FHA 203k would allow us to put a smaller down payment down for them and still have money to purchase other multifamily properties. We want to buy a property using FHA 203k under their name so we meet the owner occupied requirement, and have them put it in a land trust after the purchase for 1. ease of transfer in the future and 2. asset protection. We would make the payments and collect the rent and pay all taxes, while they would get to claim the property on their taxes. It is complicated, but is it legal? My next step is to talk to a real estate/assets attorney and accountant.

First, They would have to qualify financially for the loan, in addition to living there for at least a year.  In addition to having an adequate monthly income, they can only receive up to 6% max in down payment/closing costs assistance. Transferring to a land trust could, and most likely would, violate the due in sale clause in the mortgage.