I am buying a house with two other folks, my partner and her step mom. We are going to own it together, all of us on the mortgage. We are drafting a joint venture agreement with an attorney to make sure the details are airtight.
One thing I am having trouble with (I am trying to model it in Excel) is how to determine how much equity each person has in the house and how much money (percentage) they would get if the house sells. The appropriate formula will be written into the joint venture agreement.
Here is the precise situation: My partner and I will live together in Unit 2 of the two family house. The stepmom lives in the other Unit (Unit 1).
Each person is putting different amounts towards the down payment, monthly maintenance costs, and mortgage.
Unit 1 makes up 60% of the value of the home. Unit 2 makes up 40% of the value of the home.
What formulas can we use to determine how much equity each person has in the entire home and how much money each person gets if the house is sold?
Edit: Here is a little more information. We want to be able to independently make improvements to the units, so while Unit 1 might make up 60% of the value of the home on the day we buy it, if we finish the attic in Unit 2, those percentages would change. We're looking for a way of reflecting changes in the value of each unit (as determined by an appraiser) as well.