50/50 Partnership BRRRR on Commercial 6 Plex

8 Replies

So my wife and I partnered with a friend on a 6 plex in Ohio. Bought it off a wholesaler for 220k and both of our names are on the TITLE and we split it 50/50 all cash. We did not form a LLC as we had to buy within 5 days by the time this deal got to us. We have improved curb appeal and successfully raised the rents by 10% as they were way under market. We have an investor interested in buying for 350k, but Im wondering if its possible to BRRRR this commercial property as Partners, and get our capital back so we can keep this cash flowing property in our portfolio and not have to pay capital gains taxes. Im not sure where to start, any thoughts or suggestions would be greatly appreciated. Commercial Lender referrals would be greatly appreciated as well. Thank you for your time!

If it was me I’d have my lender order an appraisal, if it came back 300k or higher I’d refinance it. If it came back 300k or lower I’d sell to the 350k buyer.

@Wenda Wang   Thank you for taking time to respond!  We have owned it for 5 months. We have increased rents from 3200 to 4k.  I guess what I'm really asking is does a cash out refinance work the same when youre in a partnership.  Also, do we have to use a commercial loan? 

 

Originally posted by @Michael P. :

If it was me I’d have my lender order an appraisal, if it came back 300k or higher I’d refinance it. If it came back 300k or lower I’d sell to the 350k buyer.

Thank you for your input! That makes perfect sense.  So would you approach a commercial lender in the same state?   Im not even sure if the loan has to be commercial.  Im a newbie. Just wondering what that process would look like

 

Originally posted by @Evan Scott :
Originally posted by @Michael P.:

If it was me I’d have my lender order an appraisal, if it came back 300k or higher I’d refinance it. If it came back 300k or lower I’d sell to the 350k buyer.

Thank you for your input! That makes perfect sense.  So would you approach a commercial lender in the same state?   Im not even sure if the loan has to be commercial.  Im a newbie. Just wondering what that process would look like

 

Yeah it’s commercial since it’s 5+ units. Conventional is 1-4 units. Personally I would use a small local bank. What town is the property?

 

@Evan Scott 6-plex would need to go with commercial loans. Commercial loans deal with business entity as borrowing entity. The partnership is taken care of in the operating agreement of the business entity. The refinance process is the same whether it is one person or multiple people. Just need to collect the information from all the guarantors. 

Originally posted by @Michael P. :
Originally posted by @Evan Scott:
Originally posted by @Michael P.:

If it was me I’d have my lender order an appraisal, if it came back 300k or higher I’d refinance it. If it came back 300k or lower I’d sell to the 350k buyer.

Thank you for your input! That makes perfect sense.  So would you approach a commercial lender in the same state?   Im not even sure if the loan has to be commercial.  Im a newbie. Just wondering what that process would look like

Its in Cleveland, would love any suggestions.

 

Yeah it’s commercial since it’s 5+ units. Conventional is 1-4 units. Personally I would use a small local bank. What town is the property?

 

 

Originally posted by @Wenda Wang :

@Evan Scott 6-plex would need to go with commercial loans. Commercial loans deal with business entity as borrowing entity. The partnership is taken care of in the operating agreement of the business entity. The refinance process is the same whether it is one person or multiple people. Just need to collect the information from all the guarantors. 

Thank you So much for your time and your insight!  Hope you have a great day!