Home Equity Share – What’s been your experience?
Question: A woman friend of mine would like to purchase a home in the Bay Area. She can’t afford to buy the house by herself so she is considering Equity Share.
Can anyone who has done it or has looked into it give me any tips?
– What are the good and bad points to Equity Share?
– What problems did you experience?
– What good references (books) are there?
If she can’t find something here then she will probably go back to Austin, TX to buy there. 8^( So please help if you can. Thanks!
Answer: There are a couple of books available at Printers Inc. in Mountain View on equity share. I recently bought one and it seems to be a helpful source of information. I’m not sure if it is complete, since I still have some questions myself after skimming/reading sections I was interested in. However there is a standard equity share contract at the end of the book which spells out all of the terms and conditions. The only question which I havn’t gotten the answer to yet is:
If I put 50% down as the Owner-occupant and the Owner-inverster puts 50% down then at the time of the property sale we each get our original investment back (the cash we put out for the down) and then we split the profit according to the percentage of ownership ( In this case 50/50). This is what everything I’ve read seems to tell me. Now my question is concerning the monthly payments. It has been my impression that after the inital investment the Owner-occupant makes the monthly payments. Over a perio d of 3-5 the owner-occupant can outlay a lot of cash in monthly payments. How is that recouped? This isn’t clear to me. The way the standard contract reads it looks as if money spent to improve or repair the home can be recouped, but it is vague on the monthly payments. Does anyone know how that works?
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