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/u/galactichurdler
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I have a partner who has asked for my help as a cash investor on a property. We want this to be an equity play and not just a loan. This is my first time doing something like this so I'd like some advice on how to determine equity stakes. Here are the deets:
Sale price: $570,000 Mortgage amount (in my partners name) $434,000 HELOC for down payment (taken out by my partner) $124,000 My cash contribution $40,000
HOW SHOULD WE DIVIDE EQUITY ON THIS? Should it only be calculated on initial capital? In which case: Me: $40,000/$164,000= 24.3% Him: $124,000/$164,000= 75.7%
Or do I include the mortgage in his equity? Me: $40,000/$598,000= 6.6% Him: $558,000/$598,000= 93.4%
submitted by /u/galactichurdler
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Help with dividing equity
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Sale price: $570,000 Mortgage amount (in my partners name) $434,000 HELOC for down payment (taken out by my partner) $124,000 My cash contribution $40,000
HOW SHOULD WE DIVIDE EQUITY ON THIS? Should it only be calculated on initial capital? In which case: Me: $40,000/$164,000= 24.3% Him: $124,000/$164,000= 75.7%
Or do I include the mortgage in his equity? Me: $40,000/$598,000= 6.6% Him: $558,000/$598,000= 93.4%
submitted by /u/galactichurdler
[link] [comments]
Help with dividing equity
Continue reading...