“Sharing Equity” is a misnomer because a Tenant Investor that you select PURCHASES a percentage of the existing equity and shares in the appreciation, if any. When combined with an operating Agreement covering nearly every aspect of the relationship, the solution eliminates the major problems associated with investing in single family residences as an investment class.
The concept combines positive elements of other business concepts – employee ownership and a memorandum of understanding vs. a contract. The entire process is attorney averse.
The Equity Share and Lease Agreement is a memorandum of understanding and covers nearly every aspect of potential events during the tenancy of the relationship. UNLIKE SOME OTHER SOLUTIONS, the Agreement is created through cooperative negotiation by the Parties under the guidance of CoVest Properties. While CoVest Properties uses a basic template that seems to offer the best advantages to both candidates and Investors, every transaction is custom tailored and every Agreement unique to the Parties.
Implicit in the Agreement is either a rate of return required by a Capital Investor as a condition of participation or a straight percentage of appreciation decided by the Parties. The Parties are able to utilize certain sections of the tax code to enhance their investment.
Each has strong incentives to make the Agreement work. The Parties are further protected from the actions of each other through the use of a tenants-in-common method of holding title by the Parties. And, unlike most promoted investments, performance compensation for CoVest Properties is back-end loaded while most of the detail work is up front.
All transactions require the use of a neutral escrow, title insurance, and ownership, and documentation recordation for the protection of the Parties.
This Program Qualifies for IRA Investment and 1031 Tax Exchanges.