Additional Benefits of Equity Sharing
Equity sharing offers benefits to the investor, including the elimination of the landlord problem, elimination of negative cash flow from monthly payments, and the potential to purchase superior property. Depending on your situation, you may also recognize additional benefits from co-owning investment property with a home buyer/occupier.
Rental Property Owners
If you already own a rental property and want to relinquish your landlord responsibilities, equity sharing may be the answer. By equity sharing your existing property with a home buyer/occupier as a partner, you can eliminate all the headaches associated with rental property.
Long Distance Investors
If you’re interested in buying property in a hot market outside your locale, or even in an international location, equity sharing offers special advantages. By partnering with someone in the desired market, you can put their expertise to work throughout the property selection and negotiation process. You also avoid the difficulty of renting the property remotely, or the expense of hiring a property management company to rent and maintain the house on your behalf.
Family Members
When helping a family member purchase property, there are numerous advantages to equity sharing. Everyone stands to gain financially, and the agreement gives your family member an incentive to make all of their mortgage payments and maintain the property. Most importantly, having a detailed agreement in place eliminates misunderstandings and protects valued relationships.
Sellers
Equity sharing is a solution worth considering when you’re having trouble selling a property. Joint ownership allows you to pass responsibility for the debt and monthly payments to your partner, while keeping a partial interest in the property so you can recognize a return on your investment when the market improves.
Retirement Account Holders
If you have an IRA, you might not realize that you can use those funds to invest directly in real estate. Diversifying your IRA into real estate is simple and affordable using equity sharing, and only requires the use of a self-directed IRA custodian.
Co-Investors
Pooling capital with other investors will greatly expand the range of investment properties you can afford. As tenants-in-common, real estate co-investors contribute to the purchase, then rent the property out. At the conclusion of the agreement you and your partner(s) sell the property and split the proceeds, or one investor can buy out the remaining interest. If you’re looking for an investor to partner with, you can indicate this preference when you create your Home Equity Share profile. We provide a special Equity Share Calculator™ and special agreements for use by co-investors. If you already have another investor in mind, you can develop preliminary terms using the Co-investor Equity Share Calculator™.
Having reviewed the many benefits of equity sharing for investors, we encourage you to also consider the potential risks before you proceed to enter into an agreement.
