It sounds like you're in a strong position with a desirable property, and having $6k-$7k in cash flow per partner is appealing. Since refinancing won’t cover a buyout, bringing in a new partner to buy out the one who wants to exit is a reasonable option. Here are some ways to approach this:
New Partner Buyout:
You can bring in a new partner to buy out the exiting one. The key will be to present the property's value, the projected cash flow ($6k-$7k per partner), and the appreciation potential over the next few years. Highlighting the STR revenue potential, especially in a prime location, could attract investors looking for both income and future appreciation.
Steps to take:
Prepare a detailed financial breakdown of the property's current performance and future projections.
Include comparables in the area to show both STR potential and anticipated appreciation.
Offer flexibility in the buyout terms (e.g., structuring it as an installment plan if needed).
If you can’t find an individual investor, you might look for a property management company or real estate investor group that specializes in STRs. They could act as both an investor and manager, potentially bringing in more resources and taking a more active role in maximizing profits. This might appeal to them since they could earn from both the cash flow and appreciation.
Another option could be structuring the buyout or new partnership using a shared appreciation agreement. This allows the new partner to share in the appreciation when the property is sold, which could help compensate for the upfront cash investment they’ll make in buying out the partner.
If the current partner is open to it, you could explore a form of seller financing or a gradual buyout plan. You could buy out the partner over time using part of the cash flow generated by the property.
Consider a silent investor who provides capital without day-to-day involvement. Some investors prefer to be hands-off while still receiving their share of the profits. You would maintain management control while giving them a return on their investment.
Is $6k-$7k Cash Flow Enough to Attract a New Partner?
That level of cash flow, combined with the appreciation potential, could definitely be attractive to a new investor, especially if they’re interested in STRs. The key is to show the long-term benefit, including both the steady income and the future sale profits.
If you put together a clear proposal showing the return on investment (cash flow + equity appreciation), it could be a compelling case to bring in a new partner to buy out the current one.
