What Are The Advantages Of Fractional Ownership Of Commercial Real Estate?


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Have you ever divided the price of a pizza with pals since you only ate a fraction of it? That is the fundamental idea behind fractional ownership. When you have fractional ownership, you divide the costs of an asset, generally a costly one, such as a commercial property, with others while maintaining a fraction of ownership and usage rights to the item. You just pay for the piece you intend to use, just as with pizza. When you purchase it, that part is yours to keep. It appears straightforward, but there are advantages to fractional property ownership.

So, what exactly is this fractional ownership?

A fractional ownership structure is an investment model in which numerous persons or companies each acquire a share of a real estate investment, splitting the expenses of acquisition and maintenance plus the return. Instead of buying a complete property and having to come up with all the money,

fractional real estate investing enables investors to purchase a percentage stake in properties.

Fractional real estate provides a low barrier to entry for investors who are unfamiliar with real estate or have limited market expertise. A fractional real estate investor can begin investing in high-value houses in significant markets without massive money.

Yet commercial leasing spaces are expensive and need you to own and spend crores, aren’t they? It has got to be out of your league, right? However, the absence of crores does not prevent you from investing in money structures. You may proceed if all you have is even just lakhs. With fractional ownership, anything is conceivable. A person can invest in fractions ownership of commercial property with Assetmonk for Rs. 10 lacs.

Now, what are the advantages Of Fractional Ownership Of Commercial Real Estate?

  • Low entrance barrier: One of the significant advantages of fractional ownership is the lower barrier to entry. It means you can get into property investment for small amounts of money. You can also put your bucks in higher-priced properties in markets that you might not have been able to afford otherwise. Consider the following scenario: you have Rs. 50,000 to invest in property. You might put that money toward that single-family house in a less attractive section of the city where rents and home appreciation will be lower. Alternatively, you may use the fractional real estate concept to buy a portion of commercial space in the city’s most desirable areas. Alternatively, you may invest in a commercial property that would likely appreciate more quickly and attract positive rentals. A high-end commercial building becomes available to you without years of saving when numerous owners share both the costs and the earnings. Furthermore, because these commercial spaces are in great demand, they are unlikely to lie unoccupied for long, enhancing your potential rental revenue. You may start investing with Assetmonk for as low as Rs. 10 lacs.
  • Passive Income: One of the primary benefits of investing in real estate is the opportunity for passive income, which fractional owners may also enjoy. When you purchase a fractional ownership part in a property, you can not only create wealth as the value of your property increases, but you can also gain money from renters if it gets rented out. Typically, fractional owners hire a real estate management company to handle all maintenance and administrative responsibilities, with the expenses divided proportionally among the fractional house buyers, providing them with peace of mind. It also provides investors with flexibility. Because you don’t have to bother about becoming a landlord, you may invest in fractional ownership homes anywhere in the country, allowing you to take advantage of offers in rapidly markets that may not be on your door. As a result, all revenue created by fractional ownership is passive income, acquired with minimum effort on your part. Furthermore, the management business handles the acquisition and funding of the real estate investment. So, you can depend on their experience without having to conduct a lengthy study on your own.
  • Diversification: Would you like to diversify your real estate assets but lack the funds to purchase properties in various markets? You may do so with fractional real estate. For example, shared ownership enables you to own a vacation property while investing in commercial real estate and single-family rental houses and making your mortgage payments. Because your money is not bound to a single investment, you may distribute it among multiple types of properties, various locations, various grades, and even other areas within the same city. From there, you can opt to specialize in a particular area or keep diversifying and profiting from market ups and downs. Diversity is one of the best methods to mitigate the risk of real estate market swings. Fractional investing allows you to reap all of the perks of diversification without the drawback of having to put down massive deposits on each property.
  • Liquidity: One of the most complex aspects of property investment is not only investing and maintaining the asset. It’s also about getting out. Exiting high-value assets can be difficult and time-consuming. Selling something at a profit is much easier in smaller quantities. In larger numbers, the very same markup could be tough to accomplish. All fractional ownership platforms offer secondary fractional selling chances, either as an all-time accessible alternative or with opportunity windows for leaving. The liquidity of traditional real estate investments is lower than that of fractional real estate assets. Of course, you’d need to check your contract, but it’s unusual to be able to sell your investment at any moment, potentially rendering investing less dangerous. How so? You can always trade and offer others your portion of the property.
  • Long-term lease: Users of residential homes shift on a routine basis. The landlord pays the rent until a replacement renter gets found. The bulk of business buildings has lease terms of three years. The lease, however, can be extended. As a result, commercial buildings provide investors with stable revenue. These high-end office buildings are home to multinational corporations, financial institutions, and information technology enterprises. They never default on their rent payment. In addition, given the time, effort, and resources necessary to convert the flats into workplaces, such tenants typically prolong their lease term. However, for higher profits, it is advisable to invest in a formerly leased commercial property.
  • Stability: Investors are becoming fractional owners of commercial real estate because of portfolio diversification, easy exits, steady rental income, and capital gain. Moreover, the Indian CRE market would grow by 13 percent-16 percent over the next few years, making fractional ownership an attractive and interesting opportunity. The commercial property market saw just a minor decline during the first months of the lockout in 2020, and it rebounded considerably in Q3. Covid-19 has caused a drop in worldwide real estate values, particularly in London, Dubai, and Stockholm. According to industry observers, however, thanks to the thriving outsourcing sector of India, office rents increased over the same period. In actuality, MNCs (mainly from the United States and Europe) account for more than 63 percent of office space booked in India. It should serve as a green signal to investors that the time has come for them to get a piece of the property investment pie.
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As you’ve seen, investing in real estate as a fractional owner has various advantages. If, after considering the advantages and drawbacks of fractional ownership, you determine that this model is suitable for you, you can get started by joining up, choosing a property, and placing your first investment. Assetmonk specializes in fractional real estate, which means you may own shares and profit from value increase and rental income in the coming years.


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