Rent question; 3 apartment house owned by 4 people.

Rent question; 3 apartment house owned by 4 people.

Garfield, NJ · Member since 2017 · 1 post · 0 votes

I own 25% of a 3 apartment house, the other 75% is equally owned by three of my relatives (4 of us each own 25%). The house is fully paid for and currently is fully rented out (none of my relatives live there). The thing is, now I would like to live in one of the apartments but I can't figure out what would be my fair share of the rent.

Currently the rents total $3,500 a month. The apartment I would want is $900. The property taxes are about $10,500 annually. What would be fair for everyone involved?

Me not paying any rent, but the first two apartments being split 3 ways, I stead of 4? So for my living there rent-free, my portion of the $2,600 rent ($650) would be equally divided by my 3 relatives. Would that be fair?

Or would "fair" be me adding a little into the kitty? Like them taking my $650 cut and me also paying 1/4th of the property taxes? So somewhere in the $200-250 each month?

Just trying to figure out something fair for me and also the other 3 owners.

Thanks!

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  • Investor · United States · Member since 2015 · 415 posts · 487 votes
    9y
    Rent the apartment at market rate as if you were any other tenant. And then you still pay your 25% share of ownership costs, and take 25% of the profits. It's the only way to do it that treats everyone fairly.
  • Member since 2016 · 13k+ posts · 12k+ votes
    9y

    James is correct. Rent as any tenant and continue with your regular business commitments and split.

    If you can not afford the full market rent upfront you can not afford to live there.

  • Real Estate Investor · Austin, TX · Member since 2015 · 65 posts · 50 votes
    9y
    I wouldn't do it because it's too much complications considering profits/loss allocations, depreciation and tax implications. Talk to your tax advisor.
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