this post was submitted on 13 Sep 2024
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CAPITAL-ism is aimed and designed to benefit those with the capital.
I hate this about our system. To combat this i am sharing equity with the guy that rents a room. I'm tracking how much his rent payments go to paying off the mortgage (which I can make myself, it's just a larger house with rooms to spare) he will get a check based off the percent he paid off on sale, or a percentage of revenue if we end up keeping and paying it off years later. Finance people think I'm crazy giving up that much equity. I just hated tossing rent money to the void, so I figured now that I'm in a position to change my little corner of the world, I will.
Have you consulted with a lawyer about this? The laws differ from place to place, but I'd be worried the equity you give him may also grant him some sort of claim on the house, which would mean he gets a say on financial things related to the real estate. This can complicate things in the future.
Also - what does "percentage of revenue if we end up keeping and paying it off years later" mean? That after he leaves you will pay him for his share in your house?
I have and officially on paper he is a normal renter. Since this kind of deal doesn't happen there's really no system so his payout is a handshake deal on sale, as of now only around 8%. As for if the property is kept, once fully paid off he would receive a yearly dividend of what was made off rent, which wouldn't be much as we won't charge much above operating and maintenance cost. Truthfully keeping it is the less likely option as we would like to sell so he can walk away with a decent down payment on his own place.
So if you don't sell it, and instead rent it out to other people, he'd get a portion of the rent the future tenant pays? And I don't supposed said future tenant will also get equity?
I'm still working on a good way to provide value to a tenant for the rent they pay for a paid off property. Once it's paid off I only want to be charging what it takes to maintain plus a little more for unexpected problems. But again, keeping it is the less likely scenario. Down payments on their own place is the goal!