Keeping a house I bought with my ex as a rental.

Todd MacDonald · 2025-09-23T18:31:20-07:00

Hello BP community. My girlfriend and I own a house together we bought 6 years ago. We are moving different directions in life and have mutually decided splitting up is in the best interest of both of us. We get along still but we both want different things and to move in different directions. We were going to sell the house and move on. We have a mutual friend who is a mortgage broker and he suggested if neither of us need the money right now we should put the house in an LLC and get a property management company to handle it and split it 50/50. Here is the dilemma. If we sell we will both conservatively walk with around 40k a peace possibly more but I don't see any way it would be less. I want to purchase a multifamily but after searching the market and running the numbers I don't think using that 40k as a downpayment I can find any properties that even come close to the 1% rule. More like 0.5% is what I'm finding. So heres my question BP. Am I crazy for even considering keeping the house with my ex? We'd have a lawyer write up all the contracts, put it in a LLC and have a property management company handle it. Is this a nightmare waiting to happen? After mortgage, insurance, property management company, taxes we would probably only make $200 a month total which would go into an account for repairs, improvements and vacancies. Has anyone ever done this before? Is it a really stupid idea?

Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

1y

I wouldn’t do it especially since it isn’t even going to cash flow. If you want a rental find one that actually makes sense and doesn’t have strings attached.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes

1y

@Todd MacDonald how likely is your relationship with the "ex" to stay friendly or will it deteriorate more over time?

What will happen when you need to put money into the property from your pockets?
- Will they be willing to do so?

There are probably a LOT more issues that can go wrong, so a LOT more reasons to sell now and invest on your own!

BTW: if you do decide to keep it and rent out together, you will NEED a partnership agreement to set the rules about how issues that will come will be handled.

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Todd MacDonald

OP

Lame County Oregon · Member since 2020 · 5 posts · 2 votes

1y

Thank you. Those are the same things I've been thinking. Most my friends are telling me to keep the house as a rental but they also don't invest in real estate. The fact that it doesn't really cash flow shouldn't be worth the possible headache. Thank you.

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Ashish AcharyaBusiness Member

CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes

11mo

@Todd MacDonald,

A little late here, but you’re not crazy for considering keeping the property, but just be honest about what you’re signing up for. From a tax perspective, it only makes sense if the numbers and benefits justify staying financially tied to an ex. You’d need to file a partnership tax return, materially participate, and ideally do a cost segregation study to accelerate depreciation, but since you plan to use a property manager, that likely wouldn’t work. The only real benefits would be the ~$200/month cash flow and potential appreciation, which could eventually allow a 1031 exchange to defer capital gains. Another option is to buy her out, giving you full control and the ability to leverage tax strategies like material participation and cost segregation on your own. Overall, the tax benefits of keeping it together are minimal, and selling or buying her out may give you better long-term results and a clean break.

Good luck and happy to connect!

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Adam BartomeoBusiness Member

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

11mo

Having a partnership is VERY similar to being married. Seeing that you are splitting up I would suggest that one buys out the other or that you sell now. In the future, if you have a partnership, both individuals must agree on all points. This makes it difficult to manage your business. When things showed signs of going sideways with partners, I have always bought them out of the investment at a fair price.

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Rick Pozos

Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes

11mo

YES, you are crazy for even considering keeping the house with your ex? And

YES, it really is a stupid idea.

If you use the money that you net from this house, YOU, not half with someone else, can purchase something and 6 years from now you will have that appreciation by yourself.

Everyone thinks this is the wrong time to buy because there is not a bunch of cash flow. BUT people are looking at the wrong house. BUY from someone who absolutely needs to get out. THEY are the ones who will sell you a good deal. Not something from the MLS that has been on the market 5 days. When I look on market it must be 200+ days, price lowered several times and then I am going to make a low ball offer.

Dont buy on market and/or do not pay market price. THAT IS HOW YOU CASH FLOW MORE THAN .5%

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Lawrence Potts

Real Estate Agent · Member since 2018 · 459 posts · 414 votes

8mo

Hey Todd, the cashflow you'd be getting might cover the tax prep fees you'd have every year for the LLC. Sounds like it may not be of benefit. A 1031 exchange may be a good route to go if both of you guys were wanting to pursue real estate individually. But you both need to be on the same page and you would each need separate 1031 exchange broker. I had a similar situation and I created a second lien private note for my partner that I paid out each month until I refinanced and paid her out completely. We had discussed creating an LLC and going that route, but we couldn't align on agreed upon equal expenses: how do we share a big Capex issue like a new roof, etc? What happens if a tree falls down and we have to house a tenant in a hotel? It was a lot, essentially building a whole businesses partnership, that wasn't necessary for our end goals.

There are deals out there with $40k. It's hard to stick to a 1% rule to underwrite properties in the Willamette Valley though. You have to get creative to make cashflow work. 1% rule makes more sense in the Midwest. But out there, you don't get incredible appreciation and depreciation like you do here. A good deal is entirely what you define it as and what your long term goals are. Sometime that could even mean being a private money partner in a short term deal.

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Keeping a house I bought with my ex as a rental.

Keeping a house I bought with my ex as a rental.

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