Owner / Tenant Conflict
This one is a little confusing but hopefully someone can lend me some insight. By way of an inheritance myself and my two sisters inherited a new warehouse building that my Dad had built. My other sister inherited his business that just happens to be in the building. We are fine with having the sister sign a lease agreement and stay in the building and we will give her a fair deal on the rent. Now, the tricky part, she would also like to own part of the building. We are thinking that we will offer to sell her only 6% and she would be a silent member with no voting rights and could never obtain more than 24% of the building. Are there are other problems asscoiated with her being an owner and tenant within the same buiding. Are we creating problems for ourselves by selling her part of the building? Really struggling with this one. Thanks in advance for your help.
Not sure that I understand your reply or that you understand my post. She is currently renting 50% of the building and that is all she wants to rent. She also wants some ownership of the building. We are not sure if it is a good idea to sell her part of the ownership while at the same time she is a tenant and also a relative. Your thoughts?
well ...it makes a little more sense now. Since your sister occupies 50% of the building and is a sure tenant (at least for 1/2) that would be a definite plus...what better way to lock her in than with an ownership position...the biggest worry I have as landlord is "securing good tenants"...any RE investor or landlord in your position & given the choice between a renter or an owner would pick the owner every time...why, because the ownership position usually dictates "caring" which translates to better care of the property and less worry for you...regards, CWal
I think you are creating problems by not selling her all the building. Work out a fair price now-- finance it for the sister who also got the business. Take your money and move on to other things. Landlord/tenant conflict is part and parcel of the management business. When that conflict is complicated by other issues (i.e. you are renting to your sister who got an un-even distribution in the estate (regardless of who figures they got the better end of the deal)) it is a formula for Thanksgiving dinners where nobody speaks to each other.
CK...well said...regards, CWal