Need some objective, creative financing advice or ideas.
A friend of a friend is going to bid on a multi-unit house that is for sale here. The house consists of a 3-bedroom apartment (all of the original house, on 2 floors), a 2-bedroom apartment (mother in-law, added 80 years ago), and a 2-story outbuilding / carriage house that sits at the back edge of the property. About $85 to $90K because of deferred maintenance. In excellent condition the house should be about $200K+ -- it is 2900 SF and on a 1/4 acre with seasonal mountain views and privacy yet walkable to post office, Amtrak, restaurants and shopping.
The house dates from around 1875 - 1890, Victorian and will need significant work. It is fully occupied now; heat, water, roof all work well enough but the interior has been neglected. It has been a rental for at least 12 years, probably more like 30 years and only minimally maintained on the 3 bedroom side. It really needs new flooring or refinishing of the originals. Walls, paint, fumigation, some railing and fixtures. The 2 bedroom is better because the current owner is living in that one but the owner is out of money so a couple things there got half finished and some were never started but less space involved, and then the carriage house is a little shaky.
The friend wants only the carriage house, he wants me to take the 3 and our mutual friend to take the 2 bedroom. The carriage house could cost anywhere from $2000 to $30,000 to re-do. There is a big range of what could be spent on each of the units.
How could we structure a deal so that each of us can reap the benefit of whatever we put into our unit? Or should all expenses be pooled and then the equity portioned according to how much money and time each put in? I'm trying to come up with something that creates incentive for each to contribute as much as they want/can.