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 –
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.
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.
Investment in A grade properties gives high returns, the returns usually range between 12-21%.
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
In CRE fractional ownership is when multiple investors pool their assets to purchase a commercial property. This could be a hotel, office building etc.
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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Fractional Property Ownership vs. Timeshare- Where Should You Invest Your Money? People can take advantage of a vacation home’s amenities and services through timeshares and fractional ownership. Through this article, let’s discuss how they are different. Share on facebook Share on twitter Share on linkedin Fractional property ownership and timeshares are similar in the real estate industry. The only similarity is the joint ownership of property. Traditional timeshares provide you with the right to utilize the property, but not a deeded stake in the property itself. Owners of some timeshares are offered points that can be used at other properties managed by the same firm. The cost of a timeshare depends on how many points you buy. The key distinction between fractional ownership and a timeshare is the distribution of actual equity. In a fractional ownership arrangement, the buyer owns a portion of the property’s equity. If the value of the property rises, the fractional owner’s piece of the pie…
Curious About Fractional Property Ownership? Here Are The Essential Legal Facts Real estate fractional ownership is growing in popularity, which means new investment options will become available to small-scale investors. Share on facebook Share on twitter Share on linkedin Unknown in India until recently, fractional property ownership is the practice of owning a piece of property fractionally among a group of individuals. A fractional ownership scheme is one in which all participants own a share of the asset and can profit from changes in the asset’s value. Each fractional owner often owns a portion or share of the property and is listed as an owner on the title and deed. However, in some circumstances, a co-owner will only be able to use the property on certain days, weeks, or months. In other cases, the usage agreements will be specified in a separate document. When it comes to specific co-ownership agreements, several contracts can be used to specify usage rights and…
Only a small number of Indians are investing in residential and commercial buildings that pay rent to optimize their returns on investment. Amidst stock market volatility and low-interest rates on fixed deposits (FDs), we have noticed a spike in individuals buying high-value assets (commercial real estate or luxury villa). Following that, investors share both the revenue and expenses associated with it in proportion to their investment. We are witnessing the creation of a new asset class known as fractional ownership, in which numerous unrelated investors pool their resources to collectively own a high-value asset. This not only lowers the entrance cost for prospective investors but also provides them with all of the benefits of owning the asset without the need for large amounts of money upfront. With fractional ownership, investors share the advantages with co-investors while also reducing the risk of ownership. How does it work? A property’s structure is determined by its size, tenure, and several players. If a…
The pandemic has forced many businesses to adopt work from home for their employees, which made people rethink their rental obligations towards commercial office spaces and other investments. On multiple occasions, tenants who were unable to pay the rent left their landlords in jeopardy. This is making them restructure their leases. As commercial tenants opt for negotiating their leases, lease restructuring ideas are becoming innovative to ensure profit for both parties. What is a Commercial Lease? A commercial lease is a formal renting agreement of a building, property, or SVP for commercial or business use. There are several restructuring options to retain tenants and attract new ones. Some of the creative approaches taken by developers include: Rent abatement It wouldn’t be practical or even feasible for landlords to reduce their rents. The solution to this is giving respites and also going so far as offering a longer initial rent-free period to their tenants. Blend or extend In cases where tenants…
Real Estate is a unique asset class that offers investment opportunities for every kind of investor.
In India, real estate property is the single most desired investment for all, we tend to save up our lifetime’s worth of fortune for the one fine day when we can finally afford our dream property. This is not just a very big dream but it is also a very impractical and outdated way of using your hard-earned money. Fractional ownership in real estate is a modern-day investment idea wherein investors can invest an affordable and pocket-friendly amount of money to become owners of high-end properties. It is slowly gaining popularity as the modern real estate investment model. What does fractional ownership mean in real estate? Why is it gaining popularity? Fractional ownership of real estate is an investment model where a group of investors comes together to pool their assets to raise funds for purchasing real estate property together. Each investor becomes a fractional owner of the property. It is the ideal form of investment because all investors share…