Salam Alaekum - Please i need our Mufit to help with the review of the proposition below and provide commentary if its allowed Islamically or not.
We are a group of Muslims that make monthly contribution and joint invest and we distribute profit and loss base on the percentage contribution of each member.
At the stage we going into real estate investment and this is what we are doing for clarity and confirmation if we are on the rith path.
- Each member contribute how much they can
- We purchase a 3 bed room flat in the name of the company.
- We have an agreement with all the members as joint owner in the property base on their contribution.
- We rent out the 3 bedroom flat and earn an income, the income is distributed to all the member base on their percentage contribution.
- Because the value of the property always appreciate and we re-evaluate the value of the property every 6 month base on market value and we have adopted the option of a 5% market value increase every 6 month.
- This means a property we purchased at 100,000 in Jan by July the value is 105,000
- Base on this we allow the members to cash out of their investment at anytime thus making the investment liquid but the underline asset remains.
- Base on 6 above a member that invested 1,000 in the property in Jan and by August if they want to opt out and there is another willing buyer they are able to sell there stake at 1,050. They will have the cash and the buyer will have the same stake in the property.
So my real question is that are we doing the right thing by the valuation that we do every six month on the market value of the property and passing this back to the real value of the asset thus allowing any member to opt out at anytime and still get the market valuation of the property.
Your guidance will be appreciated as usual