There is a property in a very good neighborhood that my business partner and I are interested in. The house once belonged to owner's parents but has long since been vacant. Current owner has been paying property taxes on it for years. It's not in great condition but owner doesn't have the funds or the motivation to fix the property and sell it herself, but she is also hesitant to sell it to us as-is. So we came up with the idea of partnering up with the her to flip the house, turn it into a rental, and split the income equally. We will take care of the rehab, listing the property, etc. and she will include us in the title with the option to buy her share of the property at current market value in 10-15 years. Would like to hear your thoughts on this. Thank you!
That doesn’t make a lot of sense on the surface. Why would she be hesitant to sell it to you “as is?” Seems like that would be quick and easy and “least hassle”.
I personally wouldn’t want to partner with someone like that right off the bat. Equal ownership probably just gets more complicated down the line.
I would try to get to the bottom of why she has the position she has and see if you can resolve it - either through logic or dollars. It’s WAY better to buy her out than to have a non-real estate savvy person for a partner.
I can think of a lot of ‘what if' scenarios that just go down a rabbit hole with her in the picture if she has a different opinion on how the property should be handled. What if she wants it to stay in the family, what if she passed away? What if you fix it up and have a falling out? What if more and more repairs are needed? What if property taxes aren't paid. Those are just a few. Looks potentially really messy. Sure, it could all go fine, but over time I just see it as being a challenge if she is not totally REI focused.
Flipping would definitely be better than a rental though… a short term transaction, versus a long term relationship. But it begs the question of equity split if you only put in (pick number - $40,000) - how much should you get back in a flip. Doesn’t feel like it should be 50/50 at that point.