Property Valuation For Partner Buyout
I did what most people warn against....getting into business with a family member, and starting an LLC without an operating agreement. Long story short, we need to end our business ties, but there is disagreement about what the buyout price should be for each partner's equity stake. There are three of us in the LLC, and one of the partners will not consider any option other than keeping the property (SFH) for himself....he also has the most conservative calculations when determining the price he'll buy at (no surprise!), which includes realtor fees. Here is the state of things:
| PRINCIPAL | $148,000.00 |
| APPRAISAL | $200,000.00 |
| EQUITY | $52,000.00 |
| BANK ACCOUNT CASH | $20,500.00 |
| TOTAL EQUITY | $72,500.00 |
| EQUITY SPLIT DIVIDED BY 3 | $24,166.67 |
The Question: If one of the partners will end up with the property....ie: there is no realtor sale, no closing costs, no vacancies etc. is it still standard practice to value a property with those costs factored in? I say no, but the partner doing the buying is of course adamant that these should be figured in because he will eventually have to sell the properties in the future, which makes his buyout number close to $17K. I have offered to buy him out at the $24K number, but he won't sell to me.
What do you think BP members? What is a fair, by-the-books method for valuing a single-family rental to dissolve a partnership without selling the house on the market at "market price"?