Property Investment Partnerships

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"A PIP is an Open Capital Partnership between and one or more Investors and one or more Occupiers/ Investees of the property it acquires, eg a property purchased for £100,000, of which £80,000 is financed: the Occupier/Investor receives 20 shares and the Financier/Investor 80 shares at a value of £1k each. (or 200/800: 2000/8000 etc - it is the 20%/80% proportions which matter, there being no par or nominal value to these shares)

There is an Exchange of Value: in return for the use of the Property, the Occupier(s) pays a Rental to the Investor (s) for the use of the Capital, eg a rent of £6,000 pa is agreed for two years for the above property: the Occupier pays net £4,800 pa; the Investor receives net £4,800 pa. After two years, the Occupier wishes to invest £12k in the Property: at £120k valuation he purchases a further 10%: at £96k valuation he purchases 12.5% and so on." (