Selling a percentage of property as investment

Discussion in 'Luxury and Lifestyle' started by VicBee, Jun 17, 2021.

  1. VicBee


    Is this something that's done?
    A high value property is owned in common by several family members in California. Is there a market for selling a % of the property strictly as an investment?
  2. El Trado

    El Trado

    Ohh.. That sounds like a hornets nest. To buy a small percentage of something owned by a family. I doubt you get any smart investors to invest in this, unless you give a very steep discount. Unless it is strictly a rental property which can be managed purely as an investment for all parties. But as an investor, I would be very sceptical, unless there is a very clear framework in place.
  3. virtusa


    It seems that "the family" cannot agree on what to do with the property as some want to sell and others not.
    Why should somebody take over the problem from one or more family members? Why don't the family members that don't want to sell, buy out those who wish to sell?
    Many red flags for an investor. No serious investor would be interested. With a huge discount you might find a gambler...
  4. VicBee


    Ok, fair enough, maybe selling as an investment isn't the best solution. The property is valued at $5M, growing about 10% a year. We wondered if one of the family member wanted to sell (after giving priority to the other family members), would they find a buyer... From your reply it seems difficult without a steep discount.
    I suppose the alternative is to sell the %, not as a strict financial investment but as part owner of a property in common, with rights (usage, etc.) and obligations (taxes, maintenance).
    If that isn't possible, then it means whoever sells their share will have to sell at discount to the other family members who could pressure the price way down.
  5. virtusa


    Even partial ownership is not a solution.

    If you buy just a small part, you have zero control over your money. You will be the prisoner from the majority. Everything they would decide you will have to accept, even if you don't agree at all. And if finally you are fed up with all this misery, you can only sell to the "family" with whom you had fights. That will end up in a bad price and a very bad investment.
    In short: keep your hands off.

    It will be easier to find a buyer for the whole building. If that person would be found, you have a reference price to sell parts between family members.

    I know a family that had so much fights about land and houses, that it took TWO GENERATIONS to finally agree to sell everything. The whole family was fed up with discussions, going to court, breaking up the family in different groups...
    VicBee likes this.
  6. VicBee


    Yes, I can see how it could come to that.