Should we Sell, or buy out my partner and Hold??

[Ryan Luby]

Looking for some input BP Community.

Keep in mind my goal is to maximize cashflow per month, I want to keep accumulating rentals, and I don't really care about the market/property value alone since my focus is on the cashflow.

I own a 2 family in a partnership with 1 other person.

- The remaining debt on the property is just below $130k

- Last appraised at $192k

- The Mortgage currently is right around $1,200/ month

- 1 unit is rented at $1,050 per month

- 2nd unit is about to be vacant and we will need to complete a full renovation (previous tenant was in place for 7+ years)

   - But this unit can rent for $1,150-1,250 and I already have 2 separate people interested in applying to rent once we renovate

Here's the dilemma. This property is in rough shape.. will need a main roof done soon, will need siding, will need all new windows, both boilers are older, oil tanks are older... clearly, it's not ideal

But, the 1st unit I renovated and can be rented as-is for years.. with expected turnover repairs.

Once renovated the 2nd unit will also be in good condition and capable of being rented for years as-is.

So while I would have preferred we had this property completed updated from the start, the fact that the units are updated and the property can cashflow make me happy and makes completing future repairs easier.

- Once both units are updated and rented the Gross rents will total $2,200 per month. 

- I've talked to my loan officer who gave me a rough quote that we can refinance to get the PITI below $1,100 per month.

* This makes me want to keep it, I'm a contractor who's comfortable completing smaller repairs as needed myself, and I have reserves to make large repairs on the fly if needed by hiring out work, otherwise I like the cash-flow for this property in order to build up some more reserve and start tackling the larger repairs a couple years down the road.

* My partner wants to sell and get out (which we tried doing at the start of the pandemic, but because the property needs so much work we had no real interest). And I'm not confident we could sell it even if we wanted to as-is for a price I'm comfortable with.

*My thought is, I would sell if we got a great offer over the appraised value (Over $192k) and we can each walk away with around $30k cash, otherwise I'm very interested in buying out my partner and keeping this property for the cashflow, and dealing with the large repairs. 

- But.. I'm not sure how to determine a reasonable buy-out price if I go that route, should we list and gauge the interest in order to accurately find a buy-out price?

If you made it this far... What are your thoughts, what would you do?