"I have a friend who wants to put up the 20 percent down payment I need to purchase my house. It would be an investment by him, which he would recover when I sell the house or in seven years, whichever comes first. Our problem is in determining the percent of the house value at that time to which he would be entitled. He owns 20 percent coming in, but how much should he own going out?" The investor should receive more than 20 percent of house value when he exits the relationship because you get to live in the whole house, not just in the 80 percent of the house that you paid for. The challenge is to calculate that amount in a fair way, without making it too complicated. The key is the rental value of the house – what the house could be rented for if you put it on the market. This ...
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