Tips on Property Investment|The Best Investment Properties Advice
denco asked:
This is an established property managment business renting apartments to graduate college students. I would be buying a 49% position in a LLC. The existing owner would retain the other 51% and would also manage the property for a fee. Our goal would be to sell the property at the end of 3 to 4 years, when the 51% owner is ready to retire and when my son is finished with his graduate program at the same school.
Dan
This is an established property managment business renting apartments to graduate college students. I would be buying a 49% position in a LLC. The existing owner would retain the other 51% and would also manage the property for a fee. Our goal would be to sell the property at the end of 3 to 4 years, when the 51% owner is ready to retire and when my son is finished with his graduate program at the same school.
Dan
Comments
jgmeier93592001 on 7 January, 2009 at 10:05 am #
Your existing owner is retaining too much control. He has majority ownership, Managing the company and on top of that charging you a management fee. Since he has majority ownership then his cut of the net profits are larger. I would negotiate that he removes the management fee since he receives a large amount of the proceeds. If he is looking for a silent partner, then I would reduce your interest percentage by the amount of the management fee. You would have to evaluate the P/L to determine if the management fee is worth the discussion. Since he is 3-4 years from retirement, he has no reason to negotiate with you. My suggestion would be to find someone that is willing to share the profit as much as the cost of the business.
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