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Divorce and Its Impact on Shared Real Estate Investments

Real Estate and Divorce

The larger a couple’s portfolio of assets, the more complex their divorce becomes. Part of divorcing in Kentucky is negotiating an equitable division of assets, and when your assets bring in income and are consistently growing in value, it’s no surprise that neither party wants to give them up. If you and your spouse have shared real estate investments, it is important to think about what you want and what you’re willing to give up to get it.

The team at John H. Ruby & Associates can help you navigate your Louisville divorce. Call us at 502-373-8044 to set up a consultation now.

Weighing the Debt and Equity of Each Asset

Unless you and your spouse bought all of your properties outright, you likely have at least some debt associated with your various investments. Splitting up those properties doesn’t mean just taking the property, it also means taking the debt associated with that property. This includes both your personal properties, such as your family home and your vacation home and your investment properties that bring in money.

When deciding which properties you do and do not want, it’s important to consider whether or not you can carry the debt of the property. If it’s a source of income, will that monthly income cover the mortgage? What if you can’t find tenants for a few months or your tenants stop paying rent—will you be foreclosed on? Will you qualify to refinance the mortgage in your name? In addition to mortgages on properties, don’t forget lines of credit on each property and any liens you may have.

Investments as an Income Stream

One of the biggest benefits of real estate investments is their value as an income stream. Real estate generally only increases in value, which means you may be able to pull more and more money out of it as time goes on. This will definitely come into play during your division of assets, as the court will want to see that both parties get the income they need to sustain themselves. For example, if a spouse has multiple rental properties and splits them equally, that may be enough to eliminate the need for spousal support. On the flip side, if one party wants to keep all of the properties, that may mean paying the other party a substantial amount of spousal support.

Considering the Emotional and Practical Challenges

It’s not uncommon for one or both parties to have emotional ties to one or more properties. If you’ve raised your children in one home or vacationed in one property every summer for 20 years, the thought of selling or signing it over may seem impossible. Not only do you have to consider those feelings, but you should also think about how you may feel about maintaining those properties after divorce. For some, it makes more sense to get a fresh start and shake off the ghosts of those properties.

Practical concerns relate to the upkeep of those properties. Maintaining investment properties takes time, money, and some sense of know-how. Either party that takes full ownership of each property must be ready to keep it safe and habitable. You must also think about whether you want to take on the demands of being a landlord or if you have the extra funds to hire a property manager. This isn’t something you generally jump into overnight; landlords have strict obligations to their tenants, and running afoul of those rights could cost you thousands of dollars.

Securing a Fair Division

Working with an attorney is key if you want to divide your investment properties in a fair and equitable way. You should think about the current equity in each property, how much income it brings in, how much income it stands to bring in as the years pass, and the amount of work required to maintain and service the property.

Consider Your Divorce Options with John H. Ruby & Associates

The team of Louisville family law attorneys at John H. Ruby & Associates can help you work towards a fair and peaceful outcome. Take the first step now by claiming your consultation. Get in touch online or call us at 502-373-8044 to set up a meeting.