Investor · Baton Rouge, LA · Member since 2016 · 14 posts · 4 votes
I'm interested in a commercial property consisting of office space. The property is currently owned by a partnership that initially included 8 people. Over the years, some of the partners have died so now their interest has been divided between heirs. Four of the original 8 would like to hold onto the property and the other 50% want out. The property is a good deal, and I would like to either buyout 50% of the interests or the whole partnership. The price for the whole property is $300k, and the partnership currently holds ~$160,000 cash in an account. What is the best way to structure and offer? Am I buying a property or a partnership/business? If the deal is structured as buying a business, does that have the same impact on property taxes that a new sales price does? I'm new to this kind of deal, so any help is greatly appreciated. Thanks!
Real Estate Agent · Plano, TX · Member since 2015 · 734 posts · 511 votes
9y
Personally, I'd go with the buy out option over buying the LLC.
You have no way to know if there are any pending/lurking law suites waiting to hit the LLC.
You also can't be certain of who are the real heirs of the dead partners. An illegitimate child can come out of the woods at any moment and ask to reclaim his parent share and even if neither of the above sticks in court you'll still be dragged through legal proceedings and could potentially pay a lot in legal fees.
Does it really worth the risk?
Another scenario is that one of the current partners sells his shares of the LLC to someone else that brings a lot of headache or noise to the group. You really don't have control when you wank into a pre-established LLC unless you get them all to agree to rewrite the operating agreement and even then...
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y
No, buy the property. With buying the property, you'll only close if all proper parties agree, as verified by the title co., and you'll have title insurance. Also, if you buy the partnership, you will Their current basis in the property, not the sale price you are paying.