Real estate ownership is expensive. It’s no secret that there are increasingly higher financial barriers to entry. The days of two young people saving for a few years to come up with a down payment are long gone. Today, we’re looking at 21 years of saving for a downpayment for young people in Toronto–and with stagnant wage growth, it’s continue to get more difficult for young first time buyers. 

And while there are new solutions popping up to help people access homeownership like rent-to-own and co-living, it’s also worth considering co-equity models

What is a co-equity model for real estate? 

Co-equity solutions, like Key, enable purchasing real estate in small fractions. You own part of the real estate and the remaining equity is financed and owned by equity partners. Like traditional homeownership, as the value of the real estate appreciates, so do the values of all of the equity partners’ shares in the property. 

How does it work? 

If you own 5% of a property, and your equity partner owns 95% of the property and over the course of five years, the property appreciates by 15%, the value of your 5% and the value of your equity partners 95% would each increase by 15%. At Key, we have a calculator so that you can better understand how the financials work. 

Why should I care as a first time home buyer? 

Ultimately co-equity solutions allow people to get into real estate ownership sooner (due to the lower barriers to entry), this allows them to participate in the appreciation of a valuable asset while living in their suite. They also enable more flexibility. How? You’re not tied to a long term mortgage. 

How can I learn more? 

If you’re interested in learning more about Key’s co-equity solution, you can schedule a call with our team