All Topics / The Treasure Chest / share the equity growth…

Viewing 3 posts - 1 through 3 (of 3 total)
  • Profile photo of silverfox63silverfox63
    Member
    @silverfox63
    Join Date: 2002
    Post Count: 0

    How does the above subject line(share the equity growth with the tenant to keep the cashflow positive.)actually work. I am not totally sure how the concept runs.

    thanks

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi,

    I’d imagine that it would be some kind of arrangement where the tenant pays a higher rent, but in return also gains an agreed percentage of any capital gains.

    This might then be an incentive to add value to the property that will increase enjoyment for the tenant and also capital value.

    I’ve not come across an example of this in real life… yet.

    Bye,

    Steve McKnight

    **********
    Remember that success comes from doing things differently.
    **********

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of hwd007hwd007
    Member
    @hwd007
    Join Date: 2002
    Post Count: 247

    Sounds like an interesting concept that could be developed further, this “Renters Equity Share” thing. Hey this could be the next big wave in property investment, enabling cash positive brand new investments. hehe ! [8D]

    Say at the end of the tenants lease, the property is revalued based on average property growth rates for that area. The tenant is paid back the sum of their extra payments, plus a capital growth component consisting of their yearly extra contribution. Hmm starting to sound like some kind of property renters mini super. hehe

    formula

    End Lease Rebate = total yearly extra contributions plus ( total yearly extra contributions divided by the property value times property value capital growth amount. )

    For Example;

    Say CG = 10% on a $200K property = $20K

    ELR = TYEC + ( TYEC / PV * PVCG )

    say the tenant paid and extra $20 per week

    END LEASE REBATE = $1040 / $200,000 * 20,000

    Thus in this case End Lease Rebate = $1144

    Hmmmmm Rather long winded I guess so simply add 10% to the TYEC and you get the same result

    i.e. $1040 * 1.10 = $1144 doesn’t seem much but this is 10% flat rate return for simplicity.

    Not much of an incentive though

    [B)]

    seriously, I doubt it would take off though.

Viewing 3 posts - 1 through 3 (of 3 total)

The topic ‘share the equity growth…’ is closed to new replies.