Share the Wealth

Investors with hopes of tackling the real estate market and making a profit are often deterred by the reality of not having enough money to invest or even a not do flattering credit rating. The current market which saturated with homes and properties in one state of foreclosure or another offers the perfect opportunity for such investors. Some skeptics may not believe that it is possible to make a profitable real estate investment with very little or no money out of pocket, but it is true.

There are a variety of methods that one can incorporate in order to fund a deal, and even though they may not be considered very traditional, they can be a means to an end in closing a deal. One such method of creative financing is and “Equity Split.” Splitting the equity between the buyer and the seller has much to offer when financing an investment and it is a relatively uncomplicated process. It is pretty much a fifty-fifty percent split and a win-win situation for both of the parties involved. One of the advantages to both the buyer and the seller is that each is allowed to maintain fifty percent of the property and therefore, both continue to claim ownership of the property.

In addition, both the seller and the potential buyer now have a legitimately sanctioned vested interest in the property and this tends to result in both parties taking better care of the property. Duties such as necessary general upkeep, repair, and maintenance which may have been the sole responsibility of the seller are usually assumed by the now owner occupant of the property.

This type of agreement is also beneficial to builders who do not wish to sell to investors but are willing to consider a partnership with the occupant. Since the owner/occupant is technically part owner of the home or property, builders may be more willing to negotiate with them in a variety of scenarios.

From the buyer’s perspective, the fact that he/she has probably initially made a commitment to live in the house offers a certain sense of stability. The potential buyer has probably grown accustomed to the house and has also established a level of comfort to the environment he/she has chosen to live in. As an occupant and future homeowner, it is very likely that he/she be more willing to agree to purchase the property for your original asking price without the inclusion of selling costs.

Among the before mentioned beneficial attributes of splitting the equity, for the seller, there is also the possibility of attaining a high return on the initial investment, if a seller decides to put up the down payment amount for the purchase of equity shares. As for the buyer, the overall cost of sale is often lower as there are typically no other extra fees involved.

Overall, sharing the equity of a real estate property has the potential to benefit both the buyer and the seller. Ultimately, the relationship established between the buyer and the seller will not only lead to a comfortable and smooth transition between owners, but also will build a foundation for numerous potential deals.