Ownership Issues 50/50
Backstory, my family owns 1 building in NYC in a great location. There is zero mortgage on the property, could be sold vacant for around 8 figures, but it has some rent stabilized tenants, in which case it could be sold for someone half of that.
Ownership is 50/50 with my parents and their sibling. The sibling has not done well in life and is super risk adverse where my parent has done well. I am having a hard time trying to convince the sibling to sell the building and buy 1-3 new ones through a 1031x.
Does anyone have any suggestions on what to do? Due to where my family is from when the sibling dies the ownership gets transferred to my parent so if I force a sale, I could be missing out on inheriting the whole value of the building. Clearly, I want to be super safe but use a mortgage to grow the business, I don't care if I don't ownership until I'm 50 or whatever, but I know the value of the building won't grow by anything or near the amount it could we sold.
Does anyone have any unique insights or ideas on how to get to a trade/sale or get 51% ownership.
IMO if you dont need the money and the sibling doesn't need the money and the building would be worth 2x without the stabilized tenant why not wait for the tenant to croak?
In these instances the difficult ones generally like to see a 1031 trade into a higher yielding asset, have you put specific higher cap rate investments in front of the sibling?
You also don't need to trade to take out a mortgage and use that capital elsewhere.
Or they could just kill the tenant...
I like you. You think outside the box and would fit into our culture. We'd like to bring you in for an interview.
Sincerely,
Jared C. Kushner, President of Kushner Companies
It is 6 tenants, 2-3 who would likely want big buyouts.
Presume you own this as tenants in common? Just did this for my family on a multi in LA.
Court ordered partition of property and/or have the sibling refinance the building with proceeds for a buyout of your family’s interest.
Feel free to PM me.
Owned as LLC and file as S-Corp.
If the sibling is a total loser he probably is very short sighted and not financially savvy.
Just offer to buy him out.
Tell him that because of the tenants his half is only worth a million cash but because he is family you’ll give him 1.5mm cash.
we bought out widower other sibling for 750k. The remaining sibling is smart, but you are right, is very short sighted. And you can be smart, but if you don't know the industry that means he is just not well informed. Imagine having an NOI of 150k, but can preform upgrades to increase the rent, and frankly that is what the delta in value is. But he needs this property as income.
It looks like, feels like, my best option is to bleed this "cash cow" until he doesn't make him a dime, otherwise he wants to hold onto the 30k annual in income. I'm trying to make this into a 500k annual NOI, easily with 50% leverage.
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