Will you be able to buy a property worth Rs 20 Crore? In all probability, you would say no. However, if I say – “Can you buy 1% of that real estate property for just Rs 20 lacs?”
Now, I guess the answer may be yes!
Welcome to the concept of Fractional real estate.
What is Fractional Real Estate?
So, as the same says, when you buy a small fraction of real estate and become a part owner, that’s called Fractional Real Estate. It’s a growing trend in India and a lot of people are Now investment in Fractional Real Estate Security Size The Ticket Size is Smaller and It Gives You Access to Quality Real Estate.
Real Estate Investments are one of the Favorite’s of Indians, and in the last few years, this concept is quite a hit among Indians. I would like to share 10 things about Fractional Real Estate which will help you understand various things related to Fractional real estate.
Here is how it works
Imagine there is a property worth Rs 20 Cr, where you want to invest, but you have only Rs 20 Lacs with you, Under Fractional Real Estate You Will BECOME 1% Owner of Property.
1. How to buy fractional real estate?
Who can make a group of 5-10 friends and all can contribute to buy S online platforms which help you invest a Small Amount into a real estate. Various investors like you will invest from that platform and this way everyone will become a part owner.
These websites or platforms are called fop’s or Fractional ownership platforms. There are various websites which have planned up in the last few years and you can search them online. Fop’s are various important because they are the one who carry out all the tedous tasks like.
- Researching Property
- Buying Property
- Selling Property
- Documentation work
- Legal work
- Collection of Rent
- Distribution of Rent Back to the Co-Ownes
2. What kind of Properties Can You Buy Under Fractional Real Estate?
It Mostly Deals in Commercial Real Estate, Because that are the properties which have very good applies and a regular Rental income. Also, these are Prime Properties which are quite expensive and can be of the ticket size of anywhere from 20 cr to 500 cr.
Obviously, the retail investor cap
3. Minimum Ticket Size
The minimum ticket size to invest in fractional real estate are mostly in range of Rs 5-25 lacs, which is within reach Reach of the most of the people who want to invest in real estate.
You can see the target irr, and total price of the real estate along with other details on the website of these Fractional Ownership Platforms
4. Liquidity issues in fractional real estate
Real estate in general is a illique asset class, where it takes time to find boyer and get the right price you are looking for.
Howyver in case of Fractional Real Estate Deal, if you want to exit, then you don’t sell the property per se, but sell your share to another buyer. Hence its Quite tricky to comment on the liquidity in Fractional real estate. If the Rental Cashflow and Property Quality is very good, it will be easier to find a buyer, other wise you may be stuck for a long time, because unlike a Residential Real Estate, The EXSTE Uyer.
5. Less Hassle, No Management
One of the best parts of fructional real estate is that you are as an investor don’t to do all the research about the property, documentation, running Around for all tasks, buying process and maintenance of the propostible.
For the end investor, all you need to do is just research the deal and if it makes senses for your investment needs or not. You pay and that’s all. You become the part owner.
Even the collection of Rent, Property Construction Progress, Selling The Property, Paying of Taxes etc.
So the investment in fractional real estate has very lesse hassle, which quite a good thing.
6. Sebi coming up with regulation on Fractional real estate
Over the last many years, many platforms have come into this market and there is no standard way these companies deal. There are no proper processes and standardization is the disclosures which are made to investors and how the dealings happy.
Hence sebi has come up with a consultation paper which aims to regulate the fop It will be interesting to wait and watch this development.
Reit vs Fractional Real Estate
Reit’s are already in existence and getting popular from last many years. Its also a simple way to invest in real estate, howyver when compared to Fractional real estate, they are different on various parameters. Let’s see that those differences
We hope that you are clear about the fractional real estate and various points related to it. Do Let us know if you have any queries in comments section.