A good example of our winner-take-all system can be found in housing: an owner of rental property gets not only the cash flow, which is fair enough, but also ALL of the equity and ALL of the appreciation. An argument used to sell rental property is that the tenant(s) makes your mortgage payment. If the tenant is bearing the weight, shouldn't he participate in the equity and/or appreciation? Let's say I am a landlord and I *want* to help my tenant through agreeing to share in the equity/appreciation. How could I do that?
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Ftlpdx,
Renters "rent" to avoid the hassles and responsibilities of home ownership, for lots of reasons. The renter puts up at most 2 months of rent and a damage deposit, the owner puts up 0-20% of the purchase price of the units, with a commitment to make payments for the next 10,000 years.
There is nothing prohibiting a owner from offering equity in a facility. If they did, they would probably want a guarantee from the rentor of a revenue for the life span of the loan. And if a renter was willing to do that, they possibly would try to buy.
A long term lease at "lower than market" basically conveys some of the benefits of a continued revenue source to the owner, and the "payback" of sorts for a limited risk, limited time duration investment by the rentor. This is done all over the place, and the value is based upon the agreement reached between both parties.
I am sorry, but your idea is way off base. The tenants take none of the risk of vacancy, damage and have an enormous finacial stake in the property, which the tenant does not. The tenant is getting use of the property in exchange for rent, and is not entitled to the porperty owner's equity gains. Using this logic, the bank who holds my mortgage would be entitled to part of my equity gains since they have contributed to the purchase. Except, I am the owner, and entitled to all gains, losses and risks associated with ownership. Would you really want tenants to have to contribute toward equity losses in a declining Real Estate market.
If you want to help your renter just lower the rent.
If I am gaining equity then I need to pay more. There is no free lunch. The cost of the rent is an expression of several factors, and if some equity were included then that would be another factor that would drive the rent up.
Interesting question in that it exposes such a simple, core concept of what "rent" and "equity" mean... that it is hard to explain because there is such a gap in the understanding of the fundamentals & dynamics.
Its like asking for a lease automobile contract, but where you keep the car at the end. Um, the lease is a low rate because it is not a purchase. If its a purchase, that is more expensive.