Equity Sharing. How does it work, and when should you consider real estate shared equity?
When is shared equity an excellent solution? When it creates a win-win situation for both parties. In most cases, one side might have an adequate monthly income and not enough to make the down payment, while the other side (usually the investor) has adequate down payment but wishes to avoid negative cash flows and management hassles. When such a situation arises, both parties will benefit from real estate shared equity – and divide the profits accordingly.
How to Find Shared Equity Partners
Post an ad that looks something like this one from Robert Allen:
‘Nothing down to qualified person. I will deed half ownership to you in beautiful one-bedroom condo if you make the monthly payments of $425 per month. I’ll make the down payment, you make the monthly payments. Why rent when you can buy? Call Bob’
Real Estate Equity Sharing
Sharing equity means to engage in joint ownership of a property or piece of real estate. This means that each party will share in the total equity of the property and will usually share future profits equally. Conversely, the costs of the real estate investment will also be split between the two parties.
One party will usually pay the downpayment, while the other makes the monthly payments and oversees the regular management of the property.