Selling part ownership?

[renter]

So I have this little problem and was wondering if there was a solution that you guys could suggest.

Basically I part own (due to inheritance) a commercial property with 3 others. The property has been on the market for close to 18 months. We had one offer within the first 6 months but it was well below reserve and was rejected. Since then, GFC kicked in and the market completely tanked. There has been no offers/interest since.

Two of the other part owners are very well off financially so they probably don't care if it sells now or in years to come. The property is teneted so we're getting rent which is ok but I really want the place sold as I need the money. I asked one of the two if they would buy me out but the request fell on deaf ears. The other owner I cannot ask (long story) and the 3rd is in the same boat as me.

So basically my question is... is there a way of selling my share? or some other way to cash in on this asset?

 

[marg4000]

I suggest you get legal advice to see if there is any way you can force a sale, particularly if another party wants to sell also. There will always be interest if the price is right for the times.
Marg

 

[cu@thetop]

Yes you can force on a sale by appointing a trustee by going to the Supreme Court. Can you try to but them out?

If the property is still in the name of the Executors there will probably be next to nil you can do about it.

 

[renter]

I suggest you get legal advice to see if there is any way you can force a sale,

How do you force a sale when there is no buyer interest? Admittedly I don't want to sell it dirt cheap either.

Can you try to but them out?

Buy them out?... No I can't.

 

[Kristine..]

Hi renter

Inheritance is a complex situation, a bit like a post-dated cheque but you don't know when you can cash it!

Depending on the structure of the ownership, you could - ie you legally could - sell your share independently of the sale of the property

Of course, finding someone willing to buy a share would be the twist

and no doubt the tenant has been offered the opportunity to buy?

Other than continuing to have the property listed for sale and actively advertised, you will just have to wait for the market to come back

So the problem doesn't seem to be the other owners, but the lack of a buyer, and your 'need' of the money which the sale will provide to you.

Would you have still 'needed' the money if you hadn't inherited the property?

If holding the property is not costing anything, there is no point in fretting about it.



In 1997 we bought our first commercial property. It cost squillions to hold and after two years we tried to sell, but with no buyer interest at all.

Twelve years later it is the Jewel In The Crown. We were very lucky that there were no buyers in 1999 as the property is now worth at least three times what we paid for it.



The property was a gift to you marked ‘Do Not Open Until Christmas’. In due course you will receive the gift. Until then, there is probably not a lot you can do except accept the situation with good grace.

Cheers
Kristine

 

[renter]

and no doubt the tenant has been offered the opportunity to buy?

Tenant is a struggling small biz.

So the problem doesn't seem to be the other owners, but the lack of a buyer, and your 'need' of the money which the sale will provide to you.

The problem is lack of buyers and also the fact the other 2 co-owners don't want to buy me out even though they could easily.

Would you have still 'needed' the money if you hadn't inherited the property?

Even more so.

 

[Kristine..]

Ok, renter

What Capital Improved Value is on the Rates Certificate?

Let’s say that the property, in a good market, is worth $200,000

And there are now 4 owners, 2 of whom are in a position to hold the property and 2 of whom could do with the windfall of the inheritance converted into cash.

To the best of my knowledge, there is a 2 year window of opportunity for inherited properties before tax on capital gain is applied pro rata, although I am not sure if this window applies to commercial property it is worth checking out.

So let’s say that the 2 owners who want to sell make formal offers to sell to the 2 owners who are not fussed about selling but also not fussed about being further involved with the property.

Your share is worth, say, $50,000 prior to selling expenses

What is it worth to you to sell it? $40,000? $20,000? - what would you sell your share for?

What is the return on the property? Better than a fixed rate deposit would yield? Better than bank interest for commercial loans?

Does the property have a lease or is the tenant on a periodic tenancy?


Do you want a lump sum or would you take progress payments?


In other words, how can you put a deal together that would (a) appeal to an independent investor, or (b) make it worth while to one of the other owners?


An independent investor would face the problem of unwilling investment partners who may thwart future offers of sale, if one of the other owners buys they are less likely to face that problem

How can you make the deal so good that they can’t refuse to buy from you?

Doing a decent cash flow forecast would be a good start. Just ringing them up and saying ‘Hey, Uncle Dave, how about you buy my share’ won’t cut the mustard with Uncle Dave, but if you can show Uncle Dave that by buying your share he will be earning xy or z you may be in with a chance – or Uncle Dave may know someone else to buy the share once he has all the information written out for him.

Don’t assume that the other owners have done these cash flows. If the property is wholly owned with no mortgage, there would have been little incentive to run the figures.

There is a buyer for every deal but it has to be a deal for the buyer not just a quick sale for us.

And change agents. There are plenty of excellent commercial agents in Melbourne. Shop around and see who has sold recently in the area of the property and approach them s they may still have buyers on their books. Eighteen months is far too long if the agent has been actively promoting the property.

Looks like you will just have to ‘high vibe’ the property to get things moving

Cheers
Kristine

 

[renter]

Ok, renter

What Capital Improved Value is on the Rates Certificate?

Sorry don't understand what that means.

What is it worth to you to sell it? $40,000? $20,000? - what would you sell your share for?

If we got the reserve I would accept that.

What is the return on the property? Better than a fixed rate deposit would yield? Better than bank interest for commercial loans?

Does the property have a lease or is the tenant on a periodic tenancy?

Tenant has a lease. Rental return is slightly better than bank interest/deposit or on par.

Do you want a lump sum or would you take progress payments?

Lump

In other words, how can you put a deal together that would (a) appeal to an independent investor, or (b) make it worth while to one of the other owners?

The other owners know what it's worth....

How can you make the deal so good that they can’t refuse to buy from you?

Doing a decent cash flow forecast would be a good start. Just ringing them up and saying ‘Hey, Uncle Dave, how about you buy my share’ won’t cut the mustard with Uncle Dave, but if you can show Uncle Dave that by buying your share he will be earning xy or z you may be in with a chance ....

To answer the first question, I don't know. Whilst I haven't made a formal offer, I did leave it open for them to make some offer. They are smart enough to know what the place is worth and what they are getting from it. I feel it comes back to the issue of them them not concerned about acquiring most of the asset and/or selling it. I also feel that one of the other owners does not like the fact I am part owner of the place (the property has a long history in the family)....and perhaps does not want me to benefit from it.

Property is wholly owed, no mortage.

And change agents.

I would if I could but I don't have the say (property is interstate) and the other two owners have a larger share in the place than me.

I feel like a casino player who has a big pile of chips but no method to cash them in.

 

[Piston Broke]

Your waiting for them to buy you out at above current market value? lol good luck on that one.
Maybe they are experienced and see you as a pesky noob with no clue.
So instead of posting here I'd suggest you ask them for advice on how to become wealthy like them so you too would have no need to sell.

 

[renter]

Your waiting for them to buy you out at above current market value?

I never said that. The reserve price is extremely fair and I would be happy with that or near it.

For them to buy me out (and the 4th co-owner aswell) would cost the other two wealthy owners next to nothing. There would be less hassle for them in controlling the property, disbursing the rent and other matters.

 

[wylie]

If there is no mortgage on the property, is it worthwhile holding it if you possibly can, at least until the market picks up. I assume you are getting your share of the rent?

Are you wanting your share to reduce other debt? If you were managing to keep afloat before receiving this inheritance, I wonder if you can hold on a bit longer? If the family member had not passed away, how would you be managing?

It also sounds like there are family "issues" which muddies the water even more. If the wealthy ones don't like the fact that you have inherited part of this property, they may well be holding out for you to sell to them very cheaply (guessing here).

 

[renter]

If there is no mortgage on the property, is it worthwhile holding it if you possibly can, at least until the market picks up. I assume you are getting your share of the rent?

Yes getting rent.

Hold out?... prefer not. Even if the market goes crazy again like it did in 06/07, I don't see the property getting a huge increase in price... (the area does not attract high pricing from what I know). The difference to me would be minimal as I hold a smaller percentage of the pie.

Are you wanting your share to reduce other debt?

I'm wanting the money so I can buy my own place to live. As per my nickname, i'm renting and sick of it.

If the family member had not passed away, how would you be managing?

The family member who passed away did not affect my situation. Other things did.

It also sounds like there are family "issues" which muddies the water even more. If the wealthy ones don't like the fact that you have inherited part of this property, they may well be holding out for you to sell to them very cheaply (guessing here).

There are issues and they may well be doing that. The fact that I asked one if they would buy and got silence doesn't feel too good. I'm reluctant to push the matter further as i'm dealing with relatives.

It's quite an unfortunate situation that could be resolved very easily and the major two owners would be doing me a HUGE favour. Sadly they don't seem to realise that.

 

[wylie]

Just brainstorming here.... possibly no help...... but here goes......

Could you possibly use your equity in this commercial property as deposit towards buying your own place? If your relatives will not consider buying you out, could you look into utilising your equity in it somehow?

Without knowing anything else about your financial situation it is hard to know, but perhaps your rent coming in from this property could help you pay off something?

Could you buy a cheap place, rent it out while continuing to rent yourself, and the shortfall that may come from buying could be supplemented with the commercial rent?

Nor sure if you can do any of these, but it could be worthwhile to speak to a broker to bounce some ideas about.

 

[renter]

Just brainstorming here.... possibly no help...... but here goes......

Could you possibly use your equity in this commercial property as deposit towards buying your own place? If your relatives will not consider buying you out, could you look into utilising your equity in it somehow?

I don't know about that. I guess a mortgage broker would have a better idea.

I really don't want to take out a loan. I have enough already to buy a place...it's just not in the areas I can afford/want. By selling the commercial property, I would have a bit extra and it would make the difference of buying something nicer and/or in a better area.

perhaps your rent coming in from this property could help you pay off something?

It's helping to pay some of my rent.

Could you buy a cheap place, rent it out while continuing to rent yourself, and the shortfall that may come from buying could be supplemented with the commercial rent?

I really don't want to go down that path of owning a place i'll never use. I'm not the type to want to own/buy/sell multiple properties. I find the whole process too daunting and time consuming. I just want to own a place I can live in and get on with my life.

If I was like the other owners who are well off, own their own places, then it's easy to sit back and not care about this place. But like i said, i'm sick of renting, dealing with agents/landlords, rent increases every 6 or 12 months...thinking do I stay or do I move. It's a friggin headache. I'm between a rock and a hard place with this asset that is meaningless to own.

 

[Belu]

hold on a second - you have enough cash to buy a house, have cashflow coming in from the inherited comm property but want someone else to buy you out so you can pay cash for a nicer place?

hmm... you do seem quite hard done by.

To be honest, you sound a bit spoilt. Before that last post I was feeling indifferent - i mean you are making your relatives out to sound like they are nasty people who just want to see you suffer. When in reality you are in a very good situation but dont want to take on a little debt.

You don't seem to be "between a rock and a hardplace" to me - you seem to be in a great position of a full bank account and being fortunate and loved enough to be given an inheritence.

Instead of being positive about it you have pressured your relatives and are depressed. For what? Getting something for free!

I am sorry - and I was going to offer some advice - but you don't appear to deserve it.

Regards,

Ben

 

[rugrat]

hold on a second - you have enough cash to buy a house, have cashflow coming in from the inherited comm property but want someone else to buy you out so you can pay cash for a nicer place?

hmm... you do seem quite hard done by.

To be honest, you sound a bit spoilt. Before that last post I was feeling indifferent - i mean you are making your relatives out to sound like they are nasty people who just want to see you suffer. When in reality you are in a very good situation but dont want to take on a little debt.

You don't seem to be "between a rock and a hardplace" to me - you seem to be in a great position of a full bank account and being fortunate and loved enough to be given an inheritence.

Instead of being positive about it you have pressured your relatives and are depressed. For what? Getting something for free!

I am sorry - and I was going to offer some advice - but you don't appear to deserve it.

Regards,

Ben

took the words right out of my mouth.

Renter - you talk about your relatives as if they 'should' help you out. My question is 'why'? Why would they help (other then the fact they are relatives)? What would they get out of it? If they are happy with their situation why would they change it just to suit you? You don't want to take on debt from this property, well why would they wish to, simply to buy you out?

As for us 'owners' on this forum, I cann't speak for everyone - BUT I certainly put in (and am still putting in) the hard yards required to be an owner. I have been a renter and deal with all that that entails. I have saved. I have taken risks. And I never EVER had the benefit of an inheritance to help me out in the process - which is exactly what you have if you just change your thinking about it. Too many people want the best straight up, but the truth is in realestate (as with everything else in life) most people have to start at the bottom and 'work' their way into something better.

The house I am living in (my first house) is nothing flash, and certainly not my dream house - but it does the job and allowed me and my family to get off the rental wheel. One day I will have my 'dream' house, this is a stepping stone.

Things aren't happening for you, the way they would in an ideal world - but it is certainly not all bad! You have equity you can access if you choose too. You have an interest in a property that will pay off eventually when it does sell, if you can get over your impatience. You cann't use it now? well so what! if you hadn't inherited it then you wouldn't have it EVER.

 

[renter]

i mean you are making your relatives out to sound like they are nasty people who just want to see you suffer.

If that is your interpretation, then you have it wrong. I never said they were nasty or bad. I am merely pointing out that they are in a position to do me a big favour and lessen the hassle of the group ownership. I know if I was in their shoes, I would certainly do what I could to help a family relo out if they asked for it.

a little debt.

IMHO, there's no such thing as a little debt.

You don't seem to be "between a rock and a hardplace" to me ...

Well you don't know me and don't know what i've been through. But you feel it necessary to judge me rather than offer advice.

Instead of being positive about it you have pressured your relatives and are depressed.

Sorry but I haven't pressured anybody. Again you're reading into something that is not there.

 

[renter]

Renter - you talk about your relatives as if they 'should' help you out. My question is 'why'? Why would they help (other then the fact they are relatives)? What would they get out of it?

Not should, but could. If someone is in a position to do someone else a favour and can afford it, then it would certainly be greatly appreciated. As I said before, if in their position i'd have no hesitation to help someone out.
And as an ongoing concern, less owners is less hassle.

You don't want to take on debt from this property, well why would they wish to, simply to buy you out?

They're not taking on debt so I don't get your point.

but it is certainly not all bad!

I'm not painting my whole life as doom and gloom. Far from it. I'm very much grateful for the inheritance but also stating that the little bit of rent I get each year doesn't change my life. Selling the place would.

 

[Belu]

Renter - you still seem very self centered imo.

I could try and help you understand how good you appear to have it financially but I wont - i feel you will just shoot the positives down. No, i do not know you, but you havent told me anything else so i can only judge - and yes I am judging (we all are) - by what you have told me.

So far:

- you have enough cash to buy a place, but not your ideal place
- you have some cashflow coming from a comm property with no debt
- you choose not to take on any debt at all, not distinguishing between good and bad debt
- you are quite reactionary

I assume you choose to join this forum and post because you identify the wealth of knowledge on here. When presented with this knowledge, to date, you have rejected all of it. You have been defensive and closed - stopping yourself from absorbing, or at least considering, the knowledge and comments provided. Each post appears to come back to someone "helping you out".

Either way I will end this hear. I doubt you will take any of it on constructively. Believe it or not I don't spend my Sunday nights sitting here trying to pick on people through the internet. What I am trying to do is give you a big slap in the face so you can wake up to reality.

Are you here yet?

Ben

 

[renter]

When presented with this knowledge, to date, you have rejected all of it.

I haven't rejected anything. You seem to be making this a bigger issue than it is.