Consolidating Personal RE with a Partnership

[Easton Elder]

Hello BP Community, I'm looking for some advice on how to fairly combine a personal asset with a joint owned LLC. Sorry if this is lengthy I just want to make sure I adequately describe the circumstances.

First a little background: 3-1/2 years ago I purchased (financed) my first investment property - A buy and hold rental house for $180K that has done well. About a year later, a good friend and I decided to go in together on a property, thinking our individual strengths would complement one another. Luckily, we were right and the partnership has done well, and we’ve continued to grow our profile over the course of a couple years.

Now, for several reasons, we are considering bringing my first house into our joint LLC but are trying to determine the right way to do it that is fair for both parties. My initial thought is to have him buy into the property by personally paying me for half of the current equity. For Example and for the sake of round numbers: The property has appreciated to a value $200K – Outstanding principal is $120K – So he would pay me $40K (Half of $80K) and we would then jointly own the property 50/50 and move it into our LLC. It seems simple but I'm not sure it takes into account the below (if it even should for that matter) or if we're thinking about this the right way.

Additional considerations incurred at my own personal expense: Closing cost paid at the original sale - $10K of improvements made immediately after close to get it rent ready – General maintenance cost over the last 3-1/2 years.

Last, should we get an appraisal to get an “official current value”.

Thanks in advance and all help is appreciated.

Easton