Real Estate advice! Partner wants to buy me out of a rental complex. What are my options?

Question

A friend of mine and I decided to make money on a flip. Age old, over budget and now we can't sell. He wants to keep the property. 72,000 bank loan, 25,000 additional note (carried by partner). Property appraises approx. $130,000. Gross rent on the 4 unit apartment complex (2bed/1bath units completely remodeled) is $2000/month. Is $25,000 too steep of an acceptance price for a buy out?

And just to throw this in there. There was no real note drawn up on the $25,000. The money was used to complete the flip and is owed back to the partner when sold, but if he keeps the property he would consider leaving it as equity in the property - but there is no set payment or interest rate applied to it.

If partner doesn't agree to buy out price - are there options of selling my share to someone else willing to be part owner of such a venture?

Answer 1

If you were to sell to a stranger for 130,000 you would have cost to sell then pay back partner's 25, so lucky to walk off with100K less the mortgage of 72 so you have under 28K equity to split. When you buy or sell half the remaining partner will need to refinance unless you want to be liable for a mortgage on a home you don't have any ownership.
I would say if you sold your half to him for 14K then he paid the refinance cost you would have a pretty fair deal.

Answer 2

Well, my friend, what does the title read? If you are Tenants in common vs joint tenant it will make a difference. Only an attorney is legally allowed to give you this advise now! Kind of sucks since they cost so much. In class, I teach about vesting, but can not give advise because I am not an attorney. But, in class you can sell your portion which is stated on the deed. If it is 50/50 you can sell 50% to a new partner, but your current partner will have to sign when you sell your portion because the deed will change. Good Luck, if possible always buy on your own! ( on title, anyways!)