Selling a half interest- bad idea?

Question

I have a cash flowing rental property that has all my money tied up in it. It is a good rental, but I am not good at the patient game until I can save for another downpayment. Would anyone want to buy a half interest? For example, the I sell the property to an llc consisting of me and someone else. The main drawback would of course be the closing costs, but if the buyer and seller as well as terms are already decided, I know an agent that would facilitate for 1% of the purchase price. Thoughts?

Wilson Lee · Answer

All your money is tied up in it.

Well,  how do you image this LLC buying the property?  Will your partner give you "x" amount cash for %50 of the cash flow?

If that is the case,  You are only paying for the formation of the LLC and cost to record a new quit claim deed (+ any taxes).   It should be inexpensive.   Unless you have a mortgagee with a dew on sale clause.

If you have a dew on sale clause,  you can just ask the bank if they will let you move the title in to an LLC and keep you as a guarantor.  The worst they can say is no.  The only remaining option would be to get a new mortgage for the LLC with you and your partner.

You don't need a "agent" for that.  FISBO would work. You just need a closing attorney.

It could be more worth your time to look for other options.  If some would will go 50/50 with you on this house.  They will do the same on a new project.

Look in to personal loans or lines of credit too.  Buy in cash on a value add project then cash out refinance.

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