The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Neo on September 22, 2017, 08:26:32 AM
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I own rental properties with a partner. Our lawyer advised that we carry life insurance on one another. This will allow the surviving partner to buy out the deceased partner's share of the business from his heirs. Is anyone here in a rental property partnership and considered/have life insurance on their partner?
My biggest question is how much insurance should we carry, which must be determined by doing a valuation of our business. Does anyone know how to perform such a valuation? There is the cash we have invested in down payments, the balance of the business bank accounts, future earnings, etc. I did some googling but didn't find anything concrete. Perhaps valuation method is covered in our partnership agreement? I'll check that too.
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I have rental properties with a partner but we don't carry life insurance on each other. Mostly because it was experimental and small scale.
I think life insurance is overkill on a small scale. If you and your partner are scaling up, or if you have outside equity investors, it makes sense and will prevent a liquidity event to make your heirs whole.