Fractional ownership enables many investors to come with each other and obtain a stake in a higher-worth house by way of a unique goal automobile. It is a new way of owning a house – With fractional ownership, one can get ownership of a house but in a easier and more very affordable way.
Experts say it is one of the desirable investment choices as compared to other monetary merchandise present in the industry.
Shiv Parekh, Founder of hBits, says, “Fractional ownership has opened up the opportunity for retail investors to benefit from high returns on the commercial real estate properties which were earlier far from accessible for them.”
Stable returns
While the earnings from the stock industry are reliable on the industry sentiments and differ with industry fluctuations as seen in the existing pandemic scenario, this is not the case with fractional ownership. Fractional ownership provides steady returns more than a longer period of time.
Parekh says, “Fractional ownership platforms allow investors to invest in pre-leased institutional-grade properties with MNC tenants. The long lease agreements and lock-in ensure a steady flow of rental income for the investors.”
Dual added benefits in Fractional Ownership
Fractional ownership, professionals say, delivers dual added benefits to the investors in terms of month-to-month rentals and capital appreciation at the time of sale of the asset.
Market investigation
While investing in the stock industry, investors place in a lot of time in basic and technical investigation prior to investing in any stock. Parekh says, “Many a time lack of expertise leads to losses in investment in the stock market. Most fractional ownership platforms on the other hand are backed by real estate players with extensive experience and expertise in the real estate market which helps them to evaluate the correct price and yielding potential of the property.”
The properties listed on the fractional ownership platform go by way of a rigorous due diligence approach to assure higher returns for the investors.
Diversification
Industry professionals say fractional ownership enables investors to invest across properties that are situated in unique geographies, sectors getting unique clientele. Thus, Parekh points out, “there is no general correlation among the various properties.”
He additional adds, “In the stock market even if the money is distributed among various stocks all the stocks are correlated to some degree with the broader market indices, thus perfect diversification is very difficult in the stock market.”