Questions

Investment property + Heloc?

I own an investment property that I just finished updating. I paid for it using a Heloc which I am paying monthly on. May Allah forgive me I am paying interest. I want to sell it ASAP to get rid of the loan. However, I'm wondering if there is a Halal way to keep it other than paying cash for it? Jazaka Allah khayran

1answers

In your situation, seeking a Halal solution to manage the investment property while avoiding interest is commendable. Here are the best possible Halal alternatives:

Islamic Mortgage (Ijara or Murabaha): These are Shariah-compliant home financing options. With Ijara, you lease the property from the bank, and with Murabaha, the bank buys the property and sells it to you at a profit, which you pay in installments. Both methods avoid interest.

Diminishing Musharakah: This is a partnership where you and the bank purchase the property together. You gradually buy out the bank's share over time while paying rent for using their portion of the property.

Islamic Real Estate Investment Trusts (i-REITs): These allow you to invest in property without taking on interest-based loans. i-REITs generate rental income and distribute profits to investors in a Shariah-compliant manner.

Halal Financing through Islamic Banks: Some Islamic banks offer financing that complies with Shariah principles. They structure the loan to avoid interest, instead using profit-sharing or leasing agreements.

Seeking Investors for a Partnership: You could find a partner who is willing to invest in the property without involving interest. This way, you can share the profits from renting or selling the property.

Consulting with an Islamic financial advisor would be highly beneficial to ensure the chosen method aligns with Shariah principles and your financial goals.

I hope these options help. If you need more details on any of them, let me know! Jazaka Allah khayran.
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Answered 2 days ago

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