Best Investments You May Already Own

Your best investments may simply be buying more of something you already own. A few months ago I was having lunch with a friend. He and I are both one of several investors in a commercial real estate building. Although he has money in the stock market, he started investing in small single-family rental homes, then made the leap to buying an eight-plex, then a cabin rental, then became an investor, along with me and other investors, in an LLC that purchased a commercial building. After that, he purchased a larger single-family home, and then a relatively small commercial building, and most recently he purchased a good-sized office building without any other investors.

At lunch, he told me he that he had come to the conclusion that he prefers to own real estate on his own, without partners. He likes to be able to make his own decisions and would like to sell his share in the in the commercial building that he and I had purchased, along with about seven other investors, via an LLC. We each had paid $10,000 per share to invest in the building about two years ago. The property has been a two-tenant building. One side of the building has been occupied by a fairly stable tenant, but the other side of the building has had a sketchy (a “massage” parlor) tenant and one or two that didn’t fulfill their leases.

I had been considering different investment options and now I was given the opportunity to invest more in a property that I already had a fractional ownership in. When both spaces have tenants paying rent, the building is a solid producer. Although there hasn’t been a distribution yet, we’ve been paying down principal and have made some nice improvements to the property.

After giving the idea of purchasing my friend’s share in the building, I decided the best investment I could make would be in the building that I already owned part of. I liked the building’s location, visibility, there’s adequate parking, the roof is in good shape, it’s been painted recently, it’s fully leased, and I know what I’m getting into. I told my friend I would purchase his share in the building. We negotiated a bit and landed on a price of $11,600 for his share.

Is there something you already own, maybe a stock or part of a rental home or commercial building, that’s been a good investment for you? Instead of investing in something else and having to go through the due diligence process and research, does it make more sense for you to buy additional shares or buy a partner out of his or her interest?

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