Offering to pay for rehab in exchange for equity in the home

[Robin J.]

Hey BiggerPockets,

For markets that are super competitive and where property owners are reluctant to sell their homes, it's challenging to get these properties at a discounted market value. Property owners are familiar with the value in their homes, and often price fixer uppers at a premium given the competitiveness and limited supply of the market. I was thinking about an approach where you don't buy the property itself, but somehow creatively acquire a piece of the equity.

I was wondering if any investor has ever tried to acquire equity in a property that's for sale by offering to pay for rehab expenses of a home, and taking a portion of the sales proceeds? The value for the property owner seller in this scenario is that they often get a premium when their homes are remodeled and looking new from non-investor buyers. This strategy would be to get more equity out of fixing the home and give a small fee to the current property owner as a cooperative benefit.

This idea wasn't fully fleshed out so hoping this becomes more crystallized with more discussion.