buying into a property

Re: buying into a property

How much does a business valuation cost in your area - I could not imagine it would be more then a few grand

If it is only 2k or so and you really want into the deal why would you not met such a small demand for such a huge reward even if you do not agree with it risking that you upset some one or blow the deal

I would assume your investment is going to be a lot more then 2k and that is a very small part of the deal (sort of similar to where if you are buying a home and are actually smart about the seller of home makes you pay for the inspection and that scenario you may never even buy the home)

The only thing I would do is make sure they agree to the deal you state above in writing/contract before you actually pay for the valuation (simple solution is just escrow the money)

I mean they are basically giving you one heck of deal in my eyes as you skipped over 10 years of risk and they are letting you in as an equal partner.

The selling price as compared to the few extra expenses you may have to incur to make the deal go through do not seem to correlate on the same level.

I think the real question is how much are you willing to pay to get into a very fair and generous deal and how amicable do you want to make the business negotiations or risk that they just dump it and say forget it. Even the fact that two people are agreeing on such a deal is even rarer.

I think you are coming out like peaches in the scenario you describe. How much is the total property worth? Without that piece of the puzzle most will not be able to give you a solid answer anyways. Have you consulted a real estate agent / business broker / attorney in your area ye for their advice?

Re: buying into a property

Thanks for the reply. Building is appraised at 489,000 dollars. They split the remaining mortgage ($220k) and asked for 80,000 as a buy in to the equity in the building. Then 45,000 dollars business valuation for the other similar business. So my investment would be appx 190k. I contacted a business attorney and his advice was that the building is sticks and bricks and is worth a set amount per sq ft no matter what business is in it, so he didn't think the business valuation made sense.

Re: buying into a property

Hi Scout,

That changes the ballgame quit a bit. Yeah I would not agree to that type of business evaluation clause at all. I thought you meant the owners wanted you to simply pay for an appraisal on your business. If you split 489k 3 ways that would essentially = 163k so they are asking for a 27k premium if your 190k number is right (which does not seem to add up to the 45k biz evaluation you mention but again I could be missing something). Although I would listen to your business attorney I do not agree that oh the building is just sticks in bricks so look at the investment that way. They are providing you an opportunity for an equity stake in something rather then you just blowing money on rent every month while gaining nothing. There is HUGE value in this. Its why a lot of rich people buy property instead of renting. I am probably not understanding all the logistics of the deal though. How much is your rent per month? Maybe take the 27k premium they are asking and divide 27k by that and see how many months it takes to recoup the extra amount. It feels like I am missing something in this deal though as the equal splits mentioned in the original posts are just not adding up and neither are the numbers. Best of luck and certainly take the advice of your attorney and local real estate agents very seriously. Just keep in mind there is a lot to be said about owning rather then renting especially if you have the money and $150 - $190k in the grand scheme of things is really not that much to borrow/invest. On a scale of 1-10 how bad do you want the deal?

Re: buying into a property

Sorry, I forgot to include the fact they took 10% off the appraised value, so we took 440,000 as the appraised value, so I would be paying 146k for my 3rd, with 74k of that being a buy-in to compensate for the equity they have established. Then one business is asking for the 45k valuation, bringing my investment to 191k. So it's basically a wash with the 10% off the appraised value.

I would say I am at a 6 on 0 to 10, I pay $900 monthly rent and would like to see that go towards something. Thanks for the insights.

Re: buying into a property

Have you tried speaking to an attorney that specialized in properties?
They usually can help you out and even tell you important things you didn't know about.

The valuation of your property might change, but it is still something you should get an attorney for.
What state is your property located in?