I would like to ask the community how to go about selling half of one of my rental properties? Or to phrase it differently JV someone into an existing rental?

Do we simply get an appraisal done and determine my current equity and have the person pay me half?
And then draft a contract between us?

What am I missing?
Please help, thank you
Thomas

Yes, it can easily be done.

You are missing the value you bring to an investor in terms of mortgage qualification and existing structure.

As such a turn-key sells for more than an empty unit where investor has to qualify or co-qualify for the mortgage too !

Related posts:

• 50/50 JV - How is this fair ? http://myreinspace.com/threads/50-50-is-this-fair.1983/
• Red, green and blue money - what are the three crucial elements of real estate and JVs: http://myreinspace.com/threads/blue-s-red-s-and-green-s-why-the-real-estate-expert-deserves-to-make-some-money-too.29091/
• What is better: Cash-Flow or Maximum ROI ? http://myreinspace.com/threads/what-is-better-cash-flow-or-higher-roi.26596/

Thanks @ThomasBeyer !

I'll spend some time on those links....but lets say we come to an agreement on the value and the amount the other person needs to put in for 50% ownership, are the mechanics simply a JV agreement?

As Im not actually selling the property am I correct in assuming it doesn't trigger a taxable event?

Anything else to consider?

Tax implications definitely need considering. So does what %, if any, of your equity you should "give away".

Ex: say you're appraised at 400, only owe 200, equity of 200 (uncommon, but it's an example). If you require ~20% of appraised value to "buy in" for a 50% share you wouldn't want to give them $100k equity PLUS 50% ownership for a buy in of only $80k would you?

Spend some time on above links, it'll become clearer

Yes your 50% share is taxable if you had a gain. You sell like a normal purchase and sale agreement. You'd sell an undivided interest and the title would show that. Land transfer taxes are also due if ON or BC. You might want a co-ownership agreement that shows what to do if one party wishes to sell but not the other, if cash is needed but one party doesn't have it, or what to do when refi time arrives, or what to do in a dispute. I just went through that with an AB based asset.

Plus the question: what is win/win ie what is the equity you're selling worth

@kfort using your numbers I wouldn't sell at 80k if equity was 200k ...minimum I would think would be 50% = 100k plus all the added value the links mention...which would add a premium of say 30%-40%??...totaling 140k-ish??

Personally I think Thomas' general rule of

50% money partner

30% expert

20% for total mortgage qualifying

Is a great starting point for discussion.

Assuming starting from a new purchase and the above mentioned split your partner would require ~$80k to buy into an asset such as this at 50% ownership if you do the qualifying alone and provide all intelligence related to the property.

Now, consider again your number of $140k given the above. Again, really good info in the above links.