Seeking Advice on Challenging Partnership: How to Minimize Losses and Move Forward

[Margarita Bozhenkova]

Hi BiggerPockets Fam,

I’m reaching out for advice regarding a challenging situation my husband and I are facing with a real estate investment. We entered into a partnership to purchase a mobile home for $105,000 with an owner finance deal over 3 years. Our initial investment was $35,000, and our partner invested $15,000 (70/30). We paid off the first year. Our plan was to rehab the house and rent it out.

Here’s the background:

• My husband worked tirelessly, often putting in 14-hour days both at his regular job and on the property. Despite his efforts, our partner has not fulfilled his responsibilities (besides other things, he has to handle county and state dealings, as well as completing the plumbing work. 
• We had only an oral agreement on each party’s duties, and unfortunately, things have turned sour between them. My husband has become extremely stressed and disheartened by the situation, to the point where he no longer wants to work with this partner or on the property.
• The property is divided into two units: the main unit is nearly complete, but the mother-in-law unit is still under construction. The roof leaks and has to be repaired by the time the rain comes and there's no heating or AC units.
• The partner’s focus on finishing the project to perfection rather than timely completion has further delayed progress, and our financial situation has worsened as we struggle to pay the mortgage.

Given these circumstances, we’re considering selling the property. However, we’re concerned about its current condition and whether we can sell it for a reasonable price.

I’m looking for advice from experienced investors on the best course of action to minimize our losses.

Any insights or recommendations would be greatly appreciated. Thank you in advance for your help!

[Bill B.]

Tell your partner your plan to put it up for sale. (Assuming your 70% gives you a voting majority.). Get an appraisal. Then you can offer your partner 30% of that amount or agree to sell your portion to your partner for 70% of that number. The selling partner gets 10% more in reduced selling costs and the buying partner saves selling costs on their portion. 

If they are so stubborn or shortsighted to see they get more this way than an outright sale, then just do a normal outright sale. Life’s too short.