Your Thoughts About Shared Equity Investments?
I'm curious to know what lenders, investors and RE industry stakeholders think about Shared Equity investing?
We've been in the Accessory Dwelling Unit (ADU) aka BACKYARD HOME business in san Diego for almost 40 years. Until recently most of our transactions have been cash, leveraging capital from IRA's, 401k's, retirement accounts, RE portfolios or conventional cash out REFI, HELOC, 2nds, etc.
However during the past few years since the new California ADU laws were enacted we've been paying some attention to the companies that offer what is known as "Shared Equity" loans. Is anyone familiar with or actually used these types of loans? What is your opinion of them? What are the down side risks vs the upside potential for investors?
At first I didn't really pay much attention to them because our clientele had several other options. However, now that interest rates have blown up and folks are comfy with their -3% LIL's things are becoming a bit more of a challenge for several of our clients.
However, the reality is most homeowners that we deal with have a mountain of equity or a good potential for appreciable equity gain after the installation of a BACKYARD HOME given the thirst for San Diego RE desirability.
Interestingly our business hasn't slowed down a bit. if anything it's actually getting busier while the over all buy/sell market is taking a break. I think it's because property/homeowners seem to be cooling their jets about wanting to list and/or move in this crazy socio/economic environment we're dealing with. Many if not most just want to stay put yet maximize their RE investments by adding additional revenue streams be they a single home or an investment portfolio.
I'd love to hear from AR on this subject.