Fractional Ownership - Single Family Rental (long term)
Member since 2025 · 5 posts · 2 votes
I'm looking to sell a fractional interest in my single family rental. This is for long term leases in a fast growing, family-centric suburb of Richmond, VA. Does anyone have experience in finding a partner for a deal like this? I'm reaching out to traditional realtors with little success, and I'm not sure their incentive structure works for this. Any tips, help, insight, etc would be appreciated.
You’ll probably have to discount the fractions 25-50% off their share of the property’s value. (Owning 1/4th of a $500k property is worth MUCH less than $125k, maybe $60-$80k?). Even then you’d have to guarantee a minimum buy back price and time frame.
Otherwise you’re just selling a bond with no promised return that can’t be easily sold for any real amount. (As you’re discovering.) A bond that could have capital calls for a new roof or hvac system that are larger than the rent proceeds. Or you move a relative in to the property for less than market rent? What if you want to sell, I assume you write in the contract that they don’t get a vote in the plan
You’re probably better off either selling the property or just getting a mortgage/heloc/private money loan. I mean that’s what you’re really offering. Income in exchange for a claim on a portion of the property’s value. There’s no reason to take the haircut of the reduced selling price.
You’ll probably have to discount the fractions 25-50% off their share of the property’s value. (Owning 1/4th of a $500k property is worth MUCH less than $125k, maybe $60-$80k?). Even then you’d have to guarantee a minimum buy back price and time frame.
Otherwise you’re just selling a bond with no promised return that can’t be easily sold for any real amount. (As you’re discovering.) A bond that could have capital calls for a new roof or hvac system that are larger than the rent proceeds. Or you move a relative in to the property for less than market rent? What if you want to sell, I assume you write in the contract that they don’t get a vote in the plan
You’re probably better off either selling the property or just getting a mortgage/heloc/private money loan. I mean that’s what you’re really offering. Income in exchange for a claim on a portion of the property’s value. There’s no reason to take the haircut of the reduced selling price.
Thank you for the feedback. Yes, there's certainly risk in an equity investment but the upside for this particular property outweighs these risks (if proper underwriting is done). Certainly agree there must be a discount in the purchase price.
Hello Mike, I am a Realtor and investor based out of Charlottesville VA but I cover the Richmond area as well.
Just to clarify, it sounds like you purchased a rental with a partner and now you would like to sell and they don't want to sell? If so, do you have either the operating agreement of the entity purchased under or if under your personal names a joint venture agreement spelling out the terms of the agreement? These will usually include terms for this type of situation, like the other party either needing tot buy your share at fair market value or agree to a sale.
If not then you are in a sticky situation, you are able to sell your share but finding a buyer is going to be incredibly hard even if the investment is fantastic. The reason is that whoever buys your share is also buying a partner that they don't know which is a huge red flag. I personally (and any wise investor) would never do this unless my share granted me full decision making power over the property, and even then I would be hesitant. If this is the situation then your best option is probably to convince your partner to sell.
I am not surprised that you have had little luck reach out to traditional Realtors with this. Most realtors don't know even know the basics of real estate investing, and this is a tricky one.
I would be glad to hop on a call with you at some point, talk through some details, and see if there is a way I can help out. I have a good network of investors that I send deals to, so depending on the details I might be able to help you find a buyer. At the very least, I might be able to help you come up with a strategy to convince your partner to sell and/or talk through it with them.
Feel free to DM me if you want to talk more!
Hello Mike, I am a Realtor and investor based out of Charlottesville VA but I cover the Richmond area as well.
Just to clarify, it sounds like you purchased a rental with a partner and now you would like to sell and they don't want to sell? If so, do you have either the operating agreement of the entity purchased under or if under your personal names a joint venture agreement spelling out the terms of the agreement? These will usually include terms for this type of situation, like the other party either needing tot buy your share at fair market value or agree to a sale.
If not then you are in a sticky situation, you are able to sell your share but finding a buyer is going to be incredibly hard even if the investment is fantastic. The reason is that whoever buys your share is also buying a partner that they don't know which is a huge red flag. I personally (and any wise investor) would never do this unless my share granted me full decision making power over the property, and even then I would be hesitant. If this is the situation then your best option is probably to convince your partner to sell.
I am not surprised that you have had little luck reach out to traditional Realtors with this. Most realtors don't know even know the basics of real estate investing, and this is a tricky one.
I would be glad to hop on a call with you at some point, talk through some details, and see if there is a way I can help out. I have a good network of investors that I send deals to, so depending on the details I might be able to help you find a buyer. At the very least, I might be able to help you come up with a strategy to convince your partner to sell and/or talk through it with them.
Feel free to DM me if you want to talk more!