Homeowners agree to sell a share of equity at a discounted valuation of their home in exchange for a lump sum payment of cash now. This is appealing to homeowners because there are no monthly payments and no interest to pay back. Due to this upfront discount, there is an immediate 10-15% appreciation locked in.
Investing in owner-occupied home equity not only gives you access to top markets at discounted prices but also places your capital in quality assets that you know are well maintained – because the people who live there own the home, too! The discounted pricing structure of 10-15% at acquisition creates an immediate in-the-money investment, propelling the fund’s performance early in its life cycle. That 15% discount at purchase price translates to a 18% gain on investment at purchase.