Valuation of building bought significantly under appraised value
I apologize if this isn't the correct place for this question. I am not new to commercial investing, but have ran into a unique (for me) situation. I am closing on a building which I was able to acquire at a significant discount from market price. I have not yet closed on the building, but all the paperwork is lined up and just waiting for closing date. In the meantime, I have had a couple of people express interest in purchasing a percentage of the building with me. My question is, what would be the best way to approach this? Should I base their investment on a percentage of the purchase price, or of the appraised price? I feel that if I already owned the building, I would base the percentage on the appraisal, but being that this is prepurchase, that may make things a bit murky. Should I wait until after I close and then offer them a percentage? Would that open me up to immediate capital gains? I understand this isn't the place for accounting advice, and mileage may very, but any general suggestions would be appreciated.
[{"id": "d8ppgfc", "text": "You purchased the building at some cap rate. Say 10%. If it's under valued you could turn around and sell it say at an 8% cap rate. So why not, just offer the investment at the price that will result in an 8% cap rate?\n\nNot an accounting guy, but, I would assume you purchase this building with a newly created LLC. Let's say it's funded by you and the deal has closed. Again... Sell membership interests in the LLC. I think you'll now have two components. 1) your return of capital; and 2) the additional income from the sale.\n\nI'd check with my accountant to see if I couldn't shove the profit into a REIT-offered 1031 exchange.  ", "replies": [], "depth": 1}, {"id": "d8q5rcv", "text": "What are your general numbers ?\n", "replies": [], "depth": 1}]