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A good investment strategy is indispensable when it comes to building a good investment portfolio. Having a proper investment strategy gives investors the confidence to play with high risks at their own expense and generate high returns.
An investment is only good enough as long as it gives high returns, in the context of real estate investments via fractional ownership, planning an exit route becomes very easy. Investments don’t remain profitable forever, even a Commercial Real Estate property could lose its relevance with time and the property becomes illiquid, hence withdrawing your money is just as important as investing it in the first place.
Fractional Ownership – Advantages
Fractional ownership investments are gaining a reputation for being highly profitable and liquid investments. Their popularity is also owed to the various perks it comes with –
Cost-efficient
As commercial fractional ownership investments usually involve dealing with A-Grade properties and that too at a very small fraction of the price, they become pocket-friendly investments as the investment management funds and risks are shared amongst all investors.
Hassle-Free
The company you invest through takes care of your investments, manages your asset and also makes sure that the company is in profits. Not just that, good fractional ownership companies such as Assetmonk also perform the due-diligence procedure beforehand so that the investor doesn’t have to bother with the investment procedure.
High returns
Investment in A grade properties gives high returns, the returns usually range between 12-21%.
Portfolio diversification
With fractional ownership, you get the ease to purchase properties anywhere in the world and at very low prices. This gives investors an opportunity to diversify their portfolio not just in an economic context but also geographically.
The Exit Strategy– Traditional real estate vs. fractional CRE property
Although real estate properties are highly appreciative and the investment profitable, exiting a real estate investment is considered difficult because of the lengthy procedure involved in traditional investment.
Since fractional ownership basically makes the whole process much easier, here is a comparative study of how investments in commercial real estate have evolved.
| Traditional CRE | CRE via Fractional ownership | |
| Investment amounts | These require large sums of money, generally hundreds of crores, an investor might have to, either submit the large corpus or take loans from a bank. | CRE via fractional ownership doesn’t require investors to take loans or even invest a huge amount. Making the investment easier. |
| Exit Strategy | The first priority of an investor is to earn back the loan amount. And then generate profit. | Here an investor doesn’t have to worry about paying any loan. |
| An exit plan mostly involves either selling off the property or taking a new loan from the bank. | ||
| Asset Liquidity | As a commercial real estate property is not a small investment, an investor has to start planning 12 months prior to his actual exit.Traditional commercial investments are illiquid and an investor will have to have his property in mint condition and also in demand for any investor to even consider. | In fractional ownership, on the other hand, the exit plan can be initiated today and in a maximum of 3 months, your share of the property will be sold off.When it comes to their fractional ownership clients, Assetmonk, also holds internal sales to speed up the process.This way the property is either sold to an existing investor or the company purchases it. |
The Best Exit Route in Commercial Real Estate Via Fractional Ownership
From the above assessment, by now, you must have an idea as to why exiting fractional ownership is much easier when compared to traditional real estate. The simplest and the most efficient exit strategy in fractional ownership is to withdraw the money when you need it, when the investment has surpassed.
You might want to exit a fractional investment because the property isn’t performing well, and you wish to explore other properties, or the project has hit its peak and can dwindle any time now. In most of the cases, an investor must beware and keep their eyes open to the changing real estate trends. Coworking spaces are popular today, but they may not be ten years from now, and so when you invest in these properties, the best exit strategy could be to understand what’s new and in demand.
You can easily auction your share or portion of the property or transfer it to another fractional owner via your investor portal, and since the amount is in some lakhs, it will only take a couple of months for you to get sell it off.
Fractional Property Ownership in India
Fractional ownership is new to India, this means even if fractional platforms offer highly liquid cost-efficient deals, many investors will be wary of going forward with these investments.
As more and more MNCs move to India, we expect the prices and demand for commercial real estate to go up, now as fractional ownership gains experience of the Indian landscape and investors, the whole CRE investment via fractional ownership could expect a boom by 2030.
We can see instances of it in cities like Bangalore, Chennai and Hyderabad already. The customer first policies that we have incorporated at Assetmonk have attracted a lot of clients, not just that, we also aim at providing A-Grade, High-end investment deals to all investors at an IRR of up to 21%. Contact us in case of any queries.
Best Exit Routes for CRE in Fractional Ownership
FAQ’S
What is fractional investment in commercial real estate?
In CRE fractional ownership is when multiple investors pool their assets to purchase a commercial property. This could be a hotel, office building etc.
How do you find fractional ownership?
Fractional ownership deals for CRE are usually listed in FOPs (Fractional ownership platforms) visit their pages to find good deals.
You can also visit the Assetmonk website to get an understanding of what the deals might look like.
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