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Real estate investment opportunity

Fatwaa ID: 1600

Assalamualaikum. I have an investment opportunity with a company that raises funds in order to buy rental properties. These properties are then rented and the cash flow from rentals is given as quarterly distributions to the investors. My issue is that they take a loan to buy the properties in order to scale up the project. After 5 to 6 years they plan to sell that property and whatever appreciation has occured is then also split as profit with investors.

Im interested to know if this is permissible.

In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

We take note of the details of your query. We commend you for your zeal to ensure Shari’ah compliance of your investments. Indeed the barakah is in ensuring that.

If the loan in reference is an interest bearing loan, then that will not be permissible. You are a partner with them and that would affect your investment. If the loan is interest free, then it will be permissible provided that the contract and agreement itself is Shari’ah compliant.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York

01/21/1445 AH – 08/08/2023 CE | 530

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


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