HELP! Family inherited commercial property and it's a mess

[Andrew Erickson]

Ok, here is a long story short.
My grandmother bought into a piece of commercial property back in the mid 70's. It is an industrial building used by a plastic factory in LA, CA. The agreement was all done as a handshake with a friend. Let's call this friend Bob. There was a large monetary exchange. She then owned that property for 20 years and Bob paid her fair share of the rents. When she passed away she gave it to her kids (my mom and aunts). Her kids have been getting paid about $10k/yr each for the last 20 years. Everyone was happy with this. 

The Twist 
Bob just died and left his kids the property. Bob's kids had no idea about my grandmother's family. They stopped paying and thought someone was potentially stealing the money from their aging father. There is no written contract to fall back on and any bank statements of the initial purchase are long gone. 

Where we are now
After sorting it all out over the last 6 months, Bob's kids agreed to start paying again and to formalize the partnership. We need to get a good agreement set up. Lawyers of course are involved. Are there any special things we should put into the contract that we or the lawyers might not think of? 

Selling the property
My mom's siblings want to sell out and get rid of this deal. How do they do that? This property has given $10k/yr to 4 people for the last 20 years. Is a 5% cap rate reasonable? That would mean each person's share is worth $200k each. Is there any other advice on valuing the property? 

Thanks! 

[Keegan MacNichol]

You should probably hire a professional (lawyer or consultant of some sort) to take a look at everything and outline your options for you. 

[BJ G.]

pm me . i can help you with this as believe it or not i had a similar property.  we can link up and discuss it a bit. 

[Jacob Villalobos]

1. Get a idea of how much the building is worth (talk to an agent).  Might be a building in an really expensive area of LA.

2. Get an appraisal and use that a the guide for the buyout price. Not the amount they have been paying for the last 20 years.  

[Andrew Erickson]

@Jacob Villalobos, great idea. What is the best way to find a commercial agent in LA? 

[Andrew Erickson]

@BJ G., I just added you as a connection. 

[Matt Nusbaum]

@Andrew Erickson man thats a sticky situation. I would do what's needed to sell the property and move on! Working with local brokers and attorney sounds like the best way to accomplish this. Good luck!

[Joel Owens]

I have certain companies from time to time that buy partnership shares or otherwise when people want out. They DO NOT pay full value. You have what we call a lot of (hair) on the deal meaning many problems. Individual investors do not typically buy into partnerships for buyouts as it takes special expertise like the type of companies I mentioned above.

In regards to the attorney NOT ALL attorneys are equal. Make sure the attorney you use specializes in the specific type of  situation you have. Some attorneys are general practice and know a little bit about one thing and a little about another. They are DABBLERS. Dabblers can be dangerous as they tend to not be experts in a specific filed and can make mistakes or overlook problems that can cost clients dearly.

No legal advice given.  

[Thomas S.]

Your best option is to continue working with your lawyer, the fewer the number of outside partied involved in a situation like this the better. Others could take advantage of you. Your lawyer will handle it or refer you to a lawyer that will.

[Ronald Rohde]

Get a valuation appraisal. If there's no lease, irrelevant to consider that income for value.

[Jacob Villalobos]

Originally posted by @Andrew Erickson:

@Jacob Villalobos, great idea. What is the best way to find a commercial agent in LA? 

I would google someone who specializes in selling your building type.  I have worked with a few Brokers who do large buildings in Los Angeles. You can always DM me or find me on Facebook! Best of luck!