An income-share agreement (ISA) is a popular tool for structuring and financing real estate projects. ISA’s are typically created when multiple parties need to work together to achieve a common goal.
Typically, the buyer, in this case the person interested in purchasing a property, will negotiate a purchase price with the other parties involved in the sale. The seller then agrees to accept the buyer’s offer as their formal offer. If successful, the buyer signs and seals the agreement and files it with local authorities, thus making them the legal owner of the property.
The seller receives a cash payment as well as ownership rights to the property. The two biggest challenges sellers face is finding a middle ground on what they want for the property and how much they are willing to pay out.
This article will focus on helping sellers who need help with their financing obtain some by using an income-share agreement (see bullet point).
Why use an income-share agreement?
Income-share agreements are a rare sight in the world of real estate, but there are ways to get them. They work for more conventional real estate financing as well.
The agreement can be unilateral, where one party agrees only to receive something if another party agrees, or it can be bilateral, where both parties agree. Either way, there is an element of trust involved – after all, who would not want a piece of property they would be unable to sell or refinance?
If you are looking for an alternative way to secure your property and ensure both parties receive what they need from it, an income-share agreement is the right solution.
Who should use an ISA? 4) What should be included in the agreement? 5) What are the limits of an ISA? 6) Should I consult an attorney? 7) What is the required registration process for ISAs? 8) Who are typical investors for ISAs? 9) What properties make good candidates for an ISA? 10) What rate of return can I expect with an ISA?
In return for the investment, the investor receives a percentage of the profits made on the property. The property owner agrees to give up some of their ownership control in exchange for funding.