Partner wants out.

[Patrick H.]

Two years ago I formed a new incorporation with a partner with the goal of buying multiple properties over the following years. The partner and I own that business 50/50 and now he wants to cash out.

My first reaction was simply, let's sell all of the property and split the remaining cash 50/50. It feels if we do go down this road, I'm going to be leaving cash on the table, so I'm hoping someone has experienced something similar and may have some advice. I'm not really big on selling now, because I was in it for the long-term.

I see two possible strategies:

1) Sell all the property, get hit with capital gains, realtor fees, etc... Dissolve the company.

2) Refinance all the properties and buy his shares in the company. The only issue with this is the mortgage has his and my personal guarantee against our primary residences.

Let's say for example sake, we bought $500,000 of real estate in which we paid 20% down. Our remaining mortgage is now $380,000 and the real estate is worth $540,000. Equity of $160,000, therefore the partner is expecting $80,000 in his pocket minus legal, realtor fees, and capital gains.

Are there any options I'm overlooking? I'm still pretty new at this.