Find A Private Investor
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 buyer with few assets and a low income can join with an investor to buy a property.
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The buyer occupies the house and maintains it, and the investor gains access to low-cost residential financing for their real estate investment.
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While this is often a pairing of unrelated individuals (ask your local real estate broker for contacts if you are interested), it can also work well with parents or other relatives who might not be comfortable with a direct gift.
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The appeal
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To make this a valuable deal for both sides, the house needs to meet the investor's needs and be a place the buyer wants to live.
You need to create a deal that is attractive to both you and the investor.
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For the investor, the benefits of the tax write-offs, profit from appreciation and monthly income combine with the ease of working with a co-owner, not someone who simply rents.
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Often these deals are attractive to investors when major repair or remodeling is involved, and the resident co-owner offers a combination of rent and labor.
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Here is one possible way to structure an equity-sharing deal:
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- Each puts down a $10,000 down payment plus half of the closing and processing costs. A legal written agreement of the terms is created for financing and tax purposes.
- The buyer, who is now the resident co-owner, occupies and manages the property as his or her principal residence (required for tax and financing purposes).
- The buyer makes two different payments every month, half of the monthly PITI payment to the lender and half of the fair market rent of the property to the investor.
- At the end of the year, the resident co-owner deducts his cost for mortgage interest and property taxes. The investor deducts the usual costs for investment property: mortgage interest, property taxes, insurance, repairs, and depreciation for half the property.
- When they sell the property, they split the profit according to equity share.
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The lender's side
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Not all lenders are interested in equity sharing deals. As they make their money on the loan interest, they don't necessarily want the quick turnover of the property and may require an agreement to not sell the property for a period of time, often between 5 and 7 years.
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