Shared Home Equity Agreement Advise

[John Armstrong]

Term Sheet

Investor Contribution $281,494

Use of Funds Escrowed and disbursed directly to lienholders to ensure title clearance

Property Valuation Floor 700,000.00

Investor Equity Share 40% of net appreciation above valuation floor, payable at exit

Exit Trigger Sale, refinance, or 10-year maturity (whichever occurs first)

Security Instrument Recorded HEA agreement, subordinate to primary mortgage ($306,020)

Investor Position Subordinate to mortgage; senior to seller equity

Closing Timeline 30–45 days from investor commitment

Due Diligence Access Full access to property disclosures, listing activity, and lien documentation.

Strategic Rationale

Last 12 months: ~8.68% appreciation—slightly above national average

Latest quarter: ~1.61%, which annualizes to 6.61%

High Equity Potential: Estimated $281K in equity post-lien clearance.

Market Momentum: Active listing with strong visibility and buyer interest.

Risk Mitigation: Investor position secured by recorded agreement and valuation floor.

Resulting in liens of $281,494 (investor) and $306,020 (Mortgage) is $587,514

Yearly Breakdown:

Year 1:

Property Value: $700,000 × 1.06 = $742,000

Net Appreciation: $742,000 - $700,000 = $42,000

Investor's Share: $42,000 × 0.40 = $16,800

Year 2:

Property Value: $742,000 × 1.06 = $786,520

Net Appreciation: $786,520 - $700,000 = $86,520

Investor's Share: $86,520 × 0.40 = $34,608

Year 3:

Property Value: $786,520 × 1.06 = $833,711.20

Net Appreciation: $833,711.20 - $700,000 = $133,711.20

Investor's Share: $133,711.20 × 0.40 = $53,484.48

Year 4:

Property Value: $833,711.20 × 1.06 = $883,733.87

Net Appreciation: $883,733.87 - $700,000 = $183,733.87

Investor's Share: $183,733.87 × 0.40 = $73,493.55

Year 5:

Property Value: $883,733.87 × 1.06 = $936,757.90

Net Appreciation: $936,757.90 - $700,000 = $236,757.90

Investor's Share: $236,757.90 × 0.40 = $94,703.16

Year 6:

Property Value: $936,757.90 × 1.06 = $992,963.37

Net Appreciation: $992,963.37 - $700,000 = $292,963.37

Investor's Share: $292,963.37 × 0.40 = $117,185.35

Year 7:

Property Value: $992,963.37 × 1.06 = $1,052,541.18

Net Appreciation: $1,052,541.18 - $700,000 = $352,541.18

Investor's Share: $352,541.18 × 0.40 = $141,016.47

Year 8:

Property Value: $1,052,541.18 × 1.06 = $1,115,693.65

Net Appreciation: $1,115,693.65 - $700,000 = $415,693.65

Investor's Share: $415,693.65 × 0.40 = $166,277.46

Year 9:

Property Value: $1,115,693.65 × 1.06 = $1,182,635.27

Net Appreciation: $1,182,635.27 - $700,000 = $482,635.27

Investor's Share: $482,635.27 × 0.40 = $193,054.11

Year 10:

Property Value: $1,182,635.27 × 1.06 = $1,253,593.39

Net Appreciation: $1,253,593.39 - $700,000 = $553,593.39

Investor's Share: $553,593.39 × 0.40 = $221,437.36