Are there well defined ways to purchase stock in a home rather than taking a loan our on the home?

For example, imagine I wish to own a home, rather than taking a loan, I find person or business A who purchases 70% of the home and I purchase 30%. I then rent the home from our business for market rates, and slowly buy more stock in my home at market rates.

I am looking at this simply for liability and risk reduction. Owning an entire property is expensive and with a loan, a large liability. On the flip side, if I simply have stock, then the home is like any other investment.

Are their businesses that do this? Is this advisable?

  • 1
    The daily "market rate" of house "stock" cannot be well defined like stock prices. A house, like stock, is worth what someone else will pay you for it. The market value of stock can be determined because there are many transactions every day where shares are bought and sold, determining value in a very real way. After you've bought 30% of the house, how can the market value of more shares be determined, say, in a year's time? The only way to find out is to get an offer from someone else willing to buy it, which doesn't happen on a daily basis for obvious reasons. Jul 18 '18 at 19:46
  • There are rent-to-own contracts, these are typically between the buyer and the seller. They have a poor reputation as they are uncommon, bespoke, and easily written to the advantage of the seller. But there is at least one money.se question on them that goes into some explanatory detail: money.stackexchange.com/questions/69652/…
    – user662852
    Jul 19 '18 at 4:43
  • Through REITs one can participate in real estate investment with diversification and "owning" some nice properties. They typically own office buildings, restaurants and shopping malls.
    – Pete B.
    Jul 19 '18 at 10:48

This depends in part on your location. What you describe sounds very much like a scheme in operation in the United Kingdom, known as Shared Ownership, which is commonly available on new-build properties.

See: https://www.helptobuy.gov.uk/shared-ownership/


What you are describing sounds very much like an Islamic mortgage. Because Islamic banks cannot charge interest, they instead use a shared ownership model, where the customer pays rent on the bank's share of the house, while at the same time making payments to the bank to buy out the bank's share.

  • Is this common practice in the US? Are there banks that do this? If the house value goes down, what happens to the mortgage payments?
    – ignorance
    Jul 19 '18 at 0:11
  • The purchase agreement is defined in advance and the price also determined... So no dynamic pricing of home
    – Dheer
    Jul 19 '18 at 1:41

Really, this is not much different than a standard annuity mortgage with a sizeable down payment. As you pay the mortgage off, your "share" in the house increases. The biggest difference is that the bank's "share" does not change with changes in the underlying property value and that the ownership technically resides with you with the bank only having leverage to force a sale of you default on your payments.

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