What is the ruling on investing in a real estate company that buys, renovates, and sells houses, and is managed by a Muslim entity that does not deal with usury (riba), on the basis that the investor bears a portion of the loss (more than $25 is borne by the company), and profits are shared at varying percentages such that the investor receives a larger percentage of the profit when the profit is low, and their percentage decreases as the profit increases?
It is permissible to agree that the investor's share decreases as the profit increases, and it is permissible to agree that the increase in profit goes to the mudarib (entrepreneur/manager), as long as a common percentage of the profit has been determined for each party. As for the company bearing a percentage of the loss, the principle is that the mudarib is not liable except in cases of transgression or negligence. Some scholars have allowed the worker to guarantee the capital as a voluntary act after the contract is finalized and the work has commenced.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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