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What is Fractional Ownership in Commercial Real Estate

Hey, welcome once again to my channel “Top Asset Builder” In this video, I am going to talk about a new trending Commercial Real Estate Investment Strategy called “Fractional Ownership” Fractional Ownership is a great option for those who want to invest in Real Estate for earning monthly rental income but don’t have enough money for upfront Investment. So, for the next few minutes, stay tuned because Fractional Ownership in Real Estate can be an excellent way to get started with your investment portfolio & it gives you an opportunity to become the partial landlord or Grade A or A+ Properties and Earn Monthly Rental from a tenant like TCS, Standard Chartered, ICICI Bank and so on. By the way, if you are new to my channel, my name is Sanjay Kumar & on this channel I talk everything managing, multiplying money through Real Estate Investment If you find this video helpful I would appreciate if you hit the like button. Also, if you want to grow your own money and want more tips & strategy on that, please subscribe to my channel so that you don’t miss out any other video I put out. The Reasons why Top Investors invest in Commercial Real Estate? Commercial Real Estate is the only investment tool on this planet that generates Dual income for you which beats inflation The first income is “Secure Monthly Cash inflow” or “Rental Income” which is 6 to 10 percent annually also; it increases 15 % every three years The second income is in the form of Capital Appreciation which is around 5% to 15% every year So, cumulative income is around 11% to 25% annually if invested strategically. Commercial Real Estate Investment has been seen as a safe and lucrative investment in India, but there are some challenges to it. Commercial Real Estate Investing requires big capital. Since it is a capital intensive so it was sole domain of Ultra HNIs or High Net-Worth Individuals Second, it is difficult to diversify your money because you are putting all your money in a single asset. Third, it is not converted into cash immediately means selling bigger properties in a short time is sometimes difficult Fourth, it attracts high traction cost Now you may be thinking that because of these difficulties, you cannot enjoy the benefits offered by Commercial Real Estate Investments. Then you must thank to some of the FinTech Companies in India and across the globe. They have made it possible for every household to invest in commercial Real Estate in the form of Fractional or Partial Ownership. Fractional ownership is a new type of real estate investment that allows investors to invest as little as a Rs 25. For example, if you wanted to invest Rs 30 Crore worth of commercial real estate which give Rs 20 lac rental income per month. But you might have to pay all cash Rs 30 crore up front. But with fractional ownership, you could invest just Rs 25 lac and earn the same Rent Rs 16,667 more to claim your ownership proportionately. Now, the question is how does it work? Traditionally, there are four parties 1. Commercial Property, 2. Seller, 3. Investor & 4. Tenant. In Fractional Ownership, We have 1. Commercial property, 2. Seller, 3. Investor, 4. Tenant & 5. Trusteeship or LLP, you can consider it as a property management company, In traditional investment, you directly buy from seller, here in fractional ownership; Property Management Company creates a SPV (Special Purpose Vehicle) for each commercial property. And you become the shareholder in the SPV proportionate to your investment amount to the property. The only purpose of this SPV is to hold the property on your behalf and all the heavy lifting is done for you by the Property Management or Fintech Companies. Like 1. Finding the Grade A or A+ properties 2. Getting the legal and technical due diligence done 3. Property valuation 4. Property Registration from Seller to SPV 5. Valuation of Tenants Means, you save a lot of time and money. The process of investment You need to choose the right FinTech Company and go to their portal and register yourself as investor. Check all the property listing and choose the one which meets your requirement and express your interest. You are allowed to access all the required documents, like, SPV agreements, The Lease/Rental Agreement, Sale Deed, Title Report, The interesting part is that all of these are done digitally; you don’t need to go anywhere. All these documents are maintained in Your Dashboard. The property management company offering investment portals has to take license from Real Estate Regulatory Authority. Income Usually, the return on investment is 8 to 10 percent annually. Means, If you invest 25 Lac, you can get monthly rent of Rs 16500/Month Exit Selling this property is very easy and you can use any of the three ways 1. You can request for resale on your dashboard, where Property Management Company help your property to sale in around 45 to 60 days 2. You can sale it to anyone in open market your own 3. Through complete asset sale when lease tenure is over Many of my investors are enjoying monthly rental from such investment. I know it may be tricky for you to understand the entire concept. In case you need any further details or clarity, I would be happy to assist you. You can leave your comment or you can contact me on the given number. See you around shortly with some new investment strategies.

Real Asset Builder