Fractional Ownership In Real Estate: Is This The Next Big Wave In Investment Technology? Investing in various businesses has been the way to riches for the longest time. Everybody wants to invest in some booming business or in a new piece of technology or in real estate and hopes that one day their investment yields massive returns, and they can live off in a grand millionaire lifestyle. As it is true, investment in the right area at the right time does yield massive returns, an investment made at the wrong time, in the wrong area can have one lose everything. Sometimes the financial burden of investments can be overbearing. As investments involve a lot of risk and financial know-how, it can easily overwhelm one person. In India, fractional ownership is slowly gaining popularity as it is less risky for one person. Fractional ownership comes from fractional investment where a group of similar minded individuals come together and invest, thus co-owning a commercial property and distributing the risk factor and losses incurred, if any. Fractional Ownership in Commercial Real Estate. The model of fractional ownership has been seen to work in economies of developed places such as Singapore, Hong Kong, the USA, and now it is gradually gaining popularity in the Indian market. The platform of fractional ownership provides for individuals to get together and buy assets, enjoy the returns from those assets and sell their portion if they so desire and enjoy the capital gains. Assets can also be managed by the platform and if there is a pay-out from a particular asset, then it automatically distributes the pay-outs to the rest of the owners. For layman's understanding, fractional ownership in commercial real estate lets an individual own a fraction of real estate valued at 60 crore by investing as little as 30 lakhs, and enjoy all the amenities that a 60 crore investor enjoys with a steady cash flow. How does Fractional Ownership Reduce Risk? Fractional holdings help in creating diversified investments that distribute itself and minimizes the risk factor. With fractional investment, an investor can buy five different assets at five separate locations with the help of people who have specialized knowledge and lots of experience in managing assets. As the presence of modern technology has inspired and helped people create financially sound futures for themselves, fractional ownership is forcing transparency and equality along with providing many opportunities in the world of investment. Investing in real estate has always been difficult for most common folks as they don’t have enough capital required to buy directly, and the real estate sector demands a hefty amount of capital but with fractional ownership
in commercial real estate, people will break the requirement of extreme capital charged for buying real estates. Advantages of Fractional Ownership. Fractional ownership through fractional investment helps many people realize their dreams of investment in real estate. It has several advantages, such as…
More Properties to Own Investing in properties fractionally gives one the chance to own a fraction of one or more properties, maybe a resort condo or holiday homes in prime locations, that would otherwise be out of a common man's budget. When multiple owners share the cost and invest together, all of them can share the huge profits.
Deeded Ownership Fractional ownership in commercial real estate provides a deed to the fraction of the property brought, which is sometimes referred to as fractional interest. Thus, the value of the share in the property rises and falls along with the entire property's real estate value. Any rise in the value is shared equally and becomes gained equity for all fractional owners.
Owners’ rights Unlike brief rentals of a place during vacations, property owned through fractional investment gives the investor the right to use the place according to his share. For instance, if one owns one third of a share in a property, he has the right to use the property for one third or four months a year. The property can be enjoyed to the fullest extent of the share bought through fractional real estate investing.
Fractional Maintenance Property owned through fractional investment entails for a fraction of the upkeep and maintenance, which adheres to the amount of shares bought. This includes the cost of repair bills, landscaping, utilities, HOA fees, fees for the property management companies, taxes and other expenses that are associated with shared ownership. Thus, in fractional ownership of a property, the burden for maintenance costs is shared therefore lessened.
Property can be Rented Out If the ownership agreement allows, then a fractionally owned property can be rented out either for a short term basis or for a long term. All the owners may earn a share out of the rental income if that is deemed in agreement. Many people have a dream of owning a property, but not all are financially capable to realize such a dream. Fractional investment provides them with an opportunity to turn that dream into reality.