If a traditional homebuyer purchases a property at $1,000,000 and pays a down payment of $200,000, they would have $200,000 of equity in the home. Then, if the property appreciates by $500,000 and is now worth $1,500,000, the equity in that home is $700,000 (i.e. $200,000 + $500,000).
In a co-ownership example, let’s say we co-buy the same $1,000,000 home. If you contribute $80,000 (8% of the home value) and Ourboro contributes $120,000 (12%), together we’ll have a $200,000 (20%) down payment. Since you contributed 40% of the total down payment, and Ourboro contributed 60%, we would have a 40:60 equity split in the home.
If the property appreciates by the same $500,000 to be worth $1,500,000, there would be $700,000 in equity to be shared 40:60 between you and Ourboro, respectively.