I own along with two family members a small commercial building in downtown Nashville. Lease it to a great little insurance company, it's a very low stress little project.
Now this area has blown up recently and property values have risen quite a bit. We've got an interested buyer and selling now would effectively double the amount we invested 10 years ago. My other two investors are entering retirement age and are excited by the prospect of selling now, understandably.
I'd always toyed with the idea of finding investors to develop the property myself and building luxury condos or something on site, as the location is ideal. I'm weary to get involved with investors though, and I couldn't afford such a project on my own. Anyone more experienced have any advice? Would that be too much of a headache/risk? The other option is to continue to sit on the property, although another investor is worried that the metropolitan government will decide to build a park there and pay us according to our last appraisal, I'm not even sure how likely that is. Anyway, any advice is much appreciated.
Check how you set up your purchase 10 years ago. If it is not set up properly then you wouldn't be able to 1031 tax defer into other properties without keeping all partners intact.
The 1031 follows the tax id number. If you set up a TIC then each partner could exchange out with the sale and do their own thing.
With family was there an operating agreement put in place in the beginning??
If you are getting bought out at a premium it is nothing to sneeze at.
The other investor is talking about the government using eminent domain with an appraisal to take your property for the good of the general public. The appraisal value usually is much lower than the value a buyer or developer would pay that is going to convert it to a higher and more valuable use.
No legal advice given.
Based on what you've said, I'd sell the property. People entering retirement age are generally afraid of losing their money and don't like to take as many risks. What you're proposing involves additional risk taking. If something goes wrong, how would your investor/family members feel about losing money? Sell the property, pay them off, and everybody makes a profit! If they decide to continue with you, that's great. If not, you've gained valuable experience, got a nice chunk of money to put into the next deal, and you can find other like minded partners out there for future investments.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.