The one bright spot we see in today’s real estate market conditions is that buyers who had no hope of owning property during the “hot” cycle can now find deals that allow them to finally realize their dream.
One way for a prospective buyer with poor or no credit and no down to purchase property is through equity sharing. In this scheme, an investor who is usually the motivated seller provides the down payment while the occupier makes the mortgage payments and lives in the property. At the end of an agreed upon term, the occupier buys out the investor based on a current property appraisal. This term usually runs from 3-10 years.
In some cases, a desperate seller can attract both an investor and an occupier – and make a deal to retain some equity in the property that would otherwise be lost through foreclosure.
This is a very creative scheme that is becoming quite popular in today’s market. As both the occupier and the investor receive tax benefits and ROI, this beats renting AND staying out of a tough market. Hopefully more creative ideas like this will surface, and help to fuel the market again.