Do you have any idea about fractional ownership and what makes it special? Well, simply put, fractional ownership is a system where investors jointly purchase a high-value property to own a fraction of it individually. The purpose behind such a move is to earn better returns over time.
Though such type of holding structures in real estate is not new, the latest twist is about new-age platforms and how they adapt to modern technology to enhance the depth of their investor base and make the entire process of acquisition and management hassle-free.
It would be important to note that an investor’s journey starts on an online portal that lists pre-screened investment properties with all relevant information like property documents, lease contracts, due diligence reports etc. with a detailed market study and third-party valuation.
Moreover, there is also offline assistance that is made available for specific queries. Once investors get their KYC done they can invest in the shares of a company that will hold the asset and make them the real but part owners. The property then could be managed by the professional managers and the investors can take home their share of monthly rents as well as proceeds from the sale of the asset. They would also be issued periodic reports on their investment.
You can walk out of fractional ownership by selling your shares to other investors on the platform or to any compliant third party. However, it would be interesting to note here that investors are given an automatic exit once the investment horizon is over. It is therefore important that those entering Fractional Ownership have a longer investment horizon.
The investor has to pay an annual asset management fee as well as a performance-linked fee to the fractional platforms once the minimum objective of the investment is achieved.
Take for example the case of Frxnl, a technology-enabled investment platform that has started offering fractional investment opportunities in pre-leased Commercial Real Estate. Frxnl offers access to high-value, high-return opportunities by allowing the interested party to make a small investment yet own a part of their desired real estate property. This way the concerned person can diversify his wealth portfolio as well as enhance it seamlessly without undergoing the stress of managing it personally.
Though the concept of fractional ownership is yet to become trendy in India, digital platforms can play a major role in the coming times. Those interested would do well to realize that fractional ownership can prove to be beneficial in long term. However, one must realize that even while starting the individual concerned must have access to large sums. It wouldn’t be like shares and stocks, where one can start with a small amount.
However, if you are a real estate investment enthusiast then the fractional investment might just prove to be a good way to start. Click here for some amazing real estate projects.
