Listen to the article
How to Make Money With Fractional Ownership
In the modern investment world today, alternative investments are the talk of the town. Every investor aims to make money, and traditional investment options such as mutual funds or fixed deposits are barely staying abreast of inflation.
In this search for high return investment strategies, many investors are flocking to alternative investments such as private equity, fractional ownership, real estate investment, and so on.
Fractional ownership provides a tantalising opportunity for investors looking to make money, get richer with better returns, and manage risk wisely. And if you want to know how to make money with fractional ownership, you’ve come to the right place. In this guide by Assetmonk we’ll dive into how to make money from fractional ownership in real estate, and explore how fractional ownership is growing in India’s real estate sector.
How Fractional Ownership is Booming in India
As per a report from Outlook, investments in Alternative Investment Funds (AIFs) are expected to grow at a 25% compound annual growth rate (CAGR) between 2022 and 2025, led by wealth managers offering AIF products as alternatives to high net-worth individuals (HNIs), family offices, and insurance firms.
The fractional ownership real estate market, one of the biggest alternative investment models, is gaining a lot of traction in India.
According to Knight Frank, India’s fractional ownership sector is expected to grow by 65 percent, from $5.4 billion in 2020 to $8.9 billion in 2025, with a compound annual growth rate of 10.5%.
According to Mordor Intelligence, the fractional ownership market for commercial real estate is expected to increase from USD 5.4 billion to USD 8.9 billion by 2025.
Understanding Fractional Ownership Investing
Let’s start with a primer on how to invest through fractional ownership. At its core, fractional ownership, or co-ownership or joint ownership of real estate, allows a number of investors to:
- Pool in their money
- Invest together
- Collectively own a share of high value grade A properties
These high value assets or grade A properties could be commercial real estate, luxury holiday homes, or even large scale residential properties.
Think of it this way: Buying a commercial property outright requires investing crores of rupees(!) and undertaking all the headaches and duties of property management, RERA registrations, and so on, all by yourself.
Instead of shelling out a fortune and giving yourself a full time job taking care of the property, you can get started with investing in fractional ownership for as little as Rs 25 lakhs & sharing ownership of the property with a bunch of investors.
The reason for the surprising growth and takeover of fractional ownership investing in India is exactly this:
By allowing investors to pool in their resources to acquire fractional shares and co-ownership in a trophy grade A property, it has made real estate investing more accessible and affordable than ever. And by joining hands with other investors, you can mitigate risk, share the high return profits, and add to your diversified portfolios.
3 Ways to Make Money with Fractional Ownership Investing
1.Rental Yields
One primary advantage of fractional ownership of commercial real estate is its capacity to generate a consistent stream of rental income, which provides very attractive returns/yields.
Through fractional ownership, you can take part in relishing this passive income pie without undertaking the arduous task associated with property maintenance. The Fractional Ownership Platform (FOP), such as Assetmonk takes care of the nitty gritty details and management of the property, for a small fee of course.
In essence: it’s akin to watching your investment sprout and flourish while sitting back and enjoying the fruits of its labour.
2. Capital Appreciation
The age-old aphorism dictates “Buy low, sell high.”
Investors reap rewards from the underlying commercial property’s increase in value over time after their fractional ownership investment. Your real estate investment amplifies in worth as demand for commercial real estate burgeons and property values shoot up. Such is the benefit of passive income and alternative investment strategies: It’s like watching your wealth blossom right before your eyes.
3.Wealth Building Through Diversification
Through investing in fractional ownership, your overall portfolio gets a level of diversification that can help mitigate risk. A manageable level of risk is necessary for making money, and instead of putting all your eggs in one basket, by investing in fractional ownership of real estate, you can balance out the impact of any single investment having a downturn. It’s akin to building a safety net to protect your investment portfolio.
Ride the Fractional Ownership Investment Wave in India
The era of thinking high end real estate investments are only for wealthy investors is diminishing. Fractional ownership platforms such as Assetmonk have ushered in a new age, opening doors to lucrative opportunities in real estate for investors from all backgrounds. Whether you identify as a seasoned investor seeking diversification within your holdings or an enthusiastic apprentice desiring an introduction into the realm of property ownership – fractional ownership provides access to wealth accumulation strategies once solely enjoyed by privileged few.
Bottom Line
Fractional ownership has changed how the world looks at real estate investments. It is a paradigm shift, providing ease of access and potential for global growth through technological advancements. It’s a cornerstone of the modern diversified investment portfolio.
As the real estate sector in India grows, platforms that prioritise transparency, due diligence, and an overall good experience for investors will come to the front. At Assetmonk, we’ve embraced our role in shaping the future of fractional ownership in commercial real estate in India.
Fractional ownership of commercial real estate is all set to become a mainstream investment avenue. Investors who embrace this model stand to benefit from a more flexible and rewarding real estate investment experience in the years to come.
Assetmonk’s web based investment platform facilitates access to these opportunities. We also contribute to the evolution of the real estate sector, and are ready to guide investors in their fractional ownership journey.
Read More
Financial Independence Through Commercial Real Estate Investing
