awgee,
If the investor is putting up cash with no leverage, then the occupying homeowner is the only one making payments, and their loan is only on half the property. The investor would have no negative cashflow, but they would have "dead money" parked in a piece of real estate betting on future appreciation. Really, it is very similar to a raw land play: you pay minimal taxes, you get no income, and you wait for property values to rise.
I still don't understand why an investor would do this. Why not just buy a rental unit with cash? You can get about a 3% return on your money, and you can sell at any time you want to capture appreciation. It makes no sense to tie yourself in with a homeowner who controls the timing of sale.
Let's look at the flipside. If I were an investor, what would I want to make this deal worthwhile. My first thought is that I would want to turn this into an option for 100% of the equity (like graphix suggested). It would work like this: a buyer wants a $1,000,000 home, but they only have $500,000 they can raise. I put in $500,000, and they put in $500,000, and they buy the $1,000,000 home. They pay all taxes, insurance, HOA, etc. so that I have no negative cashflow. When they sell the home at an arms-length transaction (which I must approve), they receive $500,000 at the closing (less if the net of closing costs are less than $1,000,000.) They pay off any loan on the property out of their $500,000 and keep the rest. I get everything else.
So let's say the house increases 20%-25% in value and sells for $1,200,000 (net of commissions). When it sells, the buyer gets $500,000, and I get $700,000 for a $200,000 profit. As a investor/speculator this makes sense because the homeowner has increased my leverage on the investment by 50% and eliminated all my carrying costs. I have made a 40% return on my investment. Of course, it depends on how quickly I get this money to see what my real rate of return is, but this turns even a 5% rate of appreciation into a 10% annual rate of return. As an investor, you would need to ask yourself if investing in real estate without any positive cashflow and without control of the timing of the sale is worth the potential profit. For those who drink the kool-aid and believe in continual double-digit appreciation, the answer is probably yes.
The buyer has a difficult decision to make: do I live in a larger home today and give up any appreciation, or do I live in a smaller home and make a profit. Which would you choose? I suspect many "buyers" would do this. I might. It is basically a rental with ownership control. The payment is fixed for as long as you live there, and you can live there as long as you like.
