Lending, Property in Trust
I have a property I've been planning to rehab and rent out. I've spoken to several lenders, all of whom have been very helpful in educating me a bit, as someone new to this, and have been eager to work with me to get this done. However, in all those early discussions they failed to mention the fact that the property being owned by an Irrevocable Trust would be a barrier to them lending to me, and I'd naively assumed that the Trust would be treated similarly to an LLC, etc.
So here's the situation. Recognizing that I'll need to discuss options with an attorney, I'd like to have a few alternatives to bring up and talk through with them. Please let me know if you have any suggestions or insights into how to work around this, or how to revise the ownership to get things moving... or if you know of lenders that will lend to a trust.
Property is a single-family residence in need of $65-75k rehab. Has $60k remaining mortgage balance. Was the residence of a family member who recently passed. Before death, property was transferred into an Irrevocable Trust, of which I became Trustee upon death. My goal has been to borrow money for the rehab, rent it out to generate income for the Trust's beneficiaries, and then do a cash-out refi to recoup my down payment and any other out-of-pocket expenses.
I believe there are limitations in an Irrevocable Trust, which would prevent me from simply deeding the property to myself or possibly even to an LLC if I create one, even if the end result is in pursuit of my fiduciary duties to the beneficiaries, as Trustee (i.e. making the home inhabitable and generating rental income for the beneficiaries). Or can you think of ways that this could be done without going against those duties?
I'm working alone here on the money side, as the beneficiaries are minors/youths that can't really assist financially.
Appreciate any suggestions!