in touch | Real estate trends

Friends Buy $1 Million Property with Shared Equity Partnership – A New Model for Affordable Home Ownership

shared equity

Three college friends named Alex, Ben, and Casey decided that they wanted to invest in a property together, known as a shared equity partnership. They came across a beautiful $1 million property in the city that they all fell in love with and began exploring how to make it work financially. After much discussion, they settled on a shared equity partnership, where each partner would contribute a different amount towards the purchase based on their financial capacity and agreed-upon ownership share.

Alex had saved up $300,000, Ben had saved up $200,000, and Casey had saved up $100,000. They agreed to split the ownership equally, with each partner having a one-third stake in the property. With the down payment sorted, they obtained a mortgage to finance the remaining $400,000.

As part of their shared equity agreement, Alex, Ben, and Casey agreed to certain ground rules and procedures, including how decisions would be made, what would happen if one partner wanted to sell their share, and how they would handle any disputes that might arise. They even had a lawyer review their agreement to ensure that everything was fair and legal.

Over time, they were able to maintain the property’s value and, as it appreciated in value, each partner’s equity stake increased proportionally. They were able to share the financial and maintenance responsibilities, splitting the mortgage payments, property taxes, insurance, and maintenance costs equally.

Eventually, Ben got a job offer in another state that he couldn’t refuse. He talked to Alex and Casey about selling his share of the property, and they were able to work out a deal that was fair to all parties involved.

The shared equity partnership allowed Alex, Ben, and Casey to own a $1 million property together, while sharing the financial and maintenance responsibilities. They were able to build equity over time and, even though Ben eventually sold his share, they all agreed that it was a great investment and that they had gained valuable experience working together.

To finance the remaining $400,000, the partners obtained a mortgage at a 5.78% interest rate. The monthly mortgage payment, assuming a 30-year fixed-rate mortgage, was approximately $2,350.31. It’s worth noting that the actual mortgage payment could be slightly different depending on factors such as the exact interest rate, any fees associated with the loan, and the length of the loan term.

Overall, the shared equity partnership allowed Alex, Ben, and Casey to own a property that they might not have been able to afford on their own. By pooling their resources together and sharing the responsibilities, they were able to build equity, invest in a valuable asset, and build a strong partnership that allowed them to navigate any challenges that arose. For anyone interested in investing in real estate, shared equity partnerships offer an innovative and compelling solution for owning a fractional interest in a property.

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