Equity Sharing & Risk

A equity share arrangement is generally less risky for an investor than owning a rental property. The reason being that renters have little incentive to maintain or improve the property.

In an equity share, the investor assumes less and less risk the more initial capital the occupying owner contributes. If the occupying owner places zero down as initial capital, the investor takes all the risk on the property. The lower the initial capital paid by the occupying owner the higher the reserve funds that the investor should demand of the occupying owner.