I think the answer to your question is more psychological/personal than finantial.
If (a) your relationship with her is not very optimal right now, (b) you don’t see how that will improve in the future, (c) you want to have the mimimal contact with her as possible, (d) having a normal conversation with her can end up with a fight → then sell! Would you do bussiness with a friend you don’t like?
Searching for tenants, fixing things, paying the bills, taxes,… All this things requires a lot of planning and communication. If communication with your business partner is not fluent then small problems can become a real painful thing!
If she doesn’t care about the property you can buy her part, right?
Luckily everything is good. We split on good terms and still have contact, so we stayed friends. So there won‘t be any problems. We are both just debating what makes the most sense from a financial viewpoint. But as others also mentioned, maybe we are underestimating the work behind renting out the apartment.
I just don‘t want to make a mistake in terms of financial return. 7.2k/year net return or 90k invested in the stock market, probably very similiar in terms of returns. But each have their own risks.
+1 on selling here as well.
Glad everything is good, but I wouldn’t want to risk it.
Not because it could be bad for the “business” if things turn bad, but because the business itself can make things worse on a personal level.
Unless both are really motivated with the idea of doing business together for longer (but I sensed more neutral vibes from your text).
If Personal/ex-GF considerations weren’t an issue I would keep it. The uncorrelated return before price appreciation is already pretty good imo.
One point that wasn’t brought up is if it’s the right investment size for you. Given the fix costs in terms of time commitment of managing a rental property yourself, I would not bother if the equity in the apartment is something like less than 10% of your net worth. Similarly, if it’s like 50%+ of net worth, that’s too much concentration.
But again, the ex-GF thing would be a problem for me regardless. Sure as of today you’re in good terms but life conditions can change. What if she suddenly needs the money to buy a new place ?
Or one of you finds a partner which completely changes the dynamic? Even joint ownership with pure business partners can be a strain.
IIRC, the gf earns a lot less so Cortana would likely take the hit if anything goes really wrong.
If you really want a RE investment, then either buy out the gf (IMO not a good idea for this property) or sell and buy an investment property you own on your own (or just buy RE funds).
Either sell it and be done with it, or buy your ex-gf’s share. You can then rent it and choose to sell it when you want. Keep your financial and personal life independent if you can (at least in the case at hand)
You once mentioned your father was involved in helping you paint / fix the apartment. Maybe you have access to good advice on what and how to fix / upgrade at the most reasonable price in next 5-10 years.
Thanks for the many replies. It‘s fascinating that most of the answers (if not all) revolve around personal aspects and not financial ones. And here I am only thinking about „what strategy will lead to the highest networth in 5 or 10 years?“
In this situation it is only possible to predict the financial outcome if you have detailed waterproof contracts with your gf.
What if in 2 years one of you (lets say she) needs /wants the money? How is it decided if you sell at a low price for gaining time? Or would you buy her out? If so, for how much?
Because you are in early 30s looking to increase your net financial worth. If you stay disciplined and invest, by late 30s / early 40s you’ll have a decent portfolio, and will be looking for good mental health, more chill in life and less useless / unwanted stress.
The return from the flat is quite good (7.2/90k ~8%), I would keep it.
But as pointed out by many other people, being co-owner comes with risks (and I’ll ignore the added risk on an ex).
As you have an established price now, I would propose to buy out your ex share for 90k right now.
If you don’t and in a year or two down the road one of you wants to get out, you’d have to have the flat evaluated, agree on a buyout price, etc., very likely a sort of forced sale.
The place is around 15 years old. IIUC the 7.2 is gross income after interest but before repairs. I can guarantee that the dishwasher, washing machine, dryer, oven and brace yourselves: heating system will cause trouble in the next 10 years. So you will rarely realize these returns.
Also there is a lot of economies of scale in the landlord business.
I agree with many of the aspects written here and find it quite a valuable post. However, I am a bit afraid „for the markets“ if Cortana invests those 90k… as far as I followed here, he has quite a history
Potential buyer isn‘t willing to pay 860k, his max. is locked at 850k. We will rent it out now. The renting couple is interested in buying a flat in 2 years, so this might end up to be a very good deal.
If you are willing to out another 425 on the table to buy out your Gf, rent it. If you are not wilking to out that on the table (aka if you were not willing to „buy“ at 850, Inwould sell it at that price. In case of doubt, either move. In yourself or sell but do not rent out.
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