Selling Ownership in a Rental Property to a Family Member

[Jusstin Williams]

Hey y'all!

I bought a house a lil over a year ago that I have been renting out. The house has a garage converted into a studio in the backyard so that has been a medium term rental and the front has been an Airbnb off and on. I want to go full time Airbnb for the front or even medium term rental but in order to do that I have to add space for parking on the property to comply with the local short term rental ordinance. I got some quotes to add a concrete pad in the backyard and widen the driveway in the front for parking which is gonna be around $14-15k. I could potentially finance this work however I financed all of the furnishing costs and I financed mini-split additions to both houses so I really want to get away from adding additional debt. My idea would be to sell 10% ownership in the property to my brother for $20k cash so that I can pay down some debt and pay for the concrete work. This would not be a loan needing to paid back but instead we would have a 90/10 split on profits up until I eventually sell the property. Does this sound like a good idea or should I just get a loan to do the work and maintain 100% ownership.

Here are the financials...

Purchase Price: 465K
Down Payment: 30,745.37 (includes closing costs)
Furnishing Costs: 14,416.78
A/C costs: 20,087

Expenses:
PITI: 2,920
Utilities/services: approx 750

Revenue: avg. 5k/month possibly higher if I go full Airbnb as I have been seeing 70%-95% occupancy back to back since november.