Need advice on exit strategy

[Nicole Clemens]

Hi guys, 

Thank you so much in advance for anyone who takes the time to read and respond!

In 2009, without knowing anything at all about real estate, I bought my first investment property with a partner (a good friend) - an old gutted hardware store that we turned into a quadplex.  We discussed that this would be a long term investment and I assumed I'd be in it for the long haul but recently had a conversation with my partner telling me that he wants to be the sole owner because there isn't enough room for both of us - which is correct.  

Here are the details: 

We paid 90k for the building and are all in for a little over 300k. Market value is currently around 280k. Around 55k each out of pocket (terrible - i know) We've had a good amount of vacancies over the 6 years so there has never been much cash flow. We have a high interest ARM that is in both of our names personally and due in 2018. This year is one of the only years that we've had the place fully rented and it will finally start to cash flow. We pay out around 2300 and rents rec'd are 3400.

My partner wants to buy me out paying me back ONLY the 55k that I put into it.  

In 6 years I have contributed the following:  

-Lived in the property for the first year to get owner occupied loan (which we didnt get anyway)

- Loan is in both names personally (credit tied up)

-55k out of pocket

- Time spent dealing with contractors for the 9 month rehab, etc., tenants, lawyers, zoning, license and inspections, etc.  

My question is, is it an okay decision to walk away from a 6 year investment with only the money put in?  Is it fair of my partner to offer that (I'm assuming yes, since there's not much room for him to compensate me).  Should I get out now and put that 55k to work elsewhere and clear up my credit?  As I type this, the answer is becoming more clear to me lol but I just wanted to double check so that I dont get yelled at AFTER the fact when it's too late.  

Oh and lastly, the one issue with him buying me out (and this is a pretty big issue) is that the current balloon loan (due 2018) is in both of our names......he is unable to refinance at the time so he asked that I keep it in my name until the refinance in 2018.  I know this is a terrible idea 1- for liability purposes 2- it kind of defeats the purpose of getting out bc while it frees up cash, it prevents me from being able to take out additional loans in my name - but maybe there is an option that I havent thought of?  

Any advice or suggestions would be GREATLY appreciated!