You do not need a legal entity to have a business, from a tax perspective, only revenue.

Get an attorney or two or a preferred law office to handle all the legal stuff to make sure your golden on any syndication law and making sure the funds are handled correctly. 

Obviously, consult with a qualified CPA to make sure you are doing everything legally, and only take the losses you can take per the tax code.

Competent legal advice is required for this type of financing.Lenders of this type of asset will want to see some type of feasibility study that indicates that another operating motel in the market place will be successful against the existing competition and that you the operator of the motel has the background to run the business.

The chimney company refused my refund, stating that they would take legal action against me if I were to dispute the credit card transaction.

Would appreciate some legal advice!

So now we have about $90k debt on $425k worth of assets and I can't find a lender who isn't offering us outrageous terms.

. - you will have to prove source of funds for the purchase - if you opened any new unsecured debt when purchasing the home then that debt must be paid off when cashing out. 

Right now I’m really focusing on fine tuning my finances, eliminating debt, improving my credit score, working on building a savings and educate educate educate.

Omeed you need to talk with your family tax attorney and estate planner for how you would optimally structure this.No legal advice given.