The concept of Fractional Real Estate investing is essentially purchasing a portion of an investment property. Put simply, fractional investment enables you to buy a portion of a property, so you get all the (shared) benefits of owning a property without the hassles that come with owning a property.
Fractional ownership is not a new investment strategy, though you’re more likely to have heard of it in reference to asset classes such as private planes or jet ownership, or probably exotic cars than in real estate.
In traditional property investment, the investor buys an investment property and receives rent from their tenants living there. In fractional property investment, a group of like-minded investors interested in a particular property pool their money together, allowing them to invest in higher-value properties than they otherwise would have access to. The investor buys a portion or a “fraction” of an investment property and in return receives a “fraction” of the rental income and a “fraction” of the capital growth.
Until recently, owning A-Class commercial real estate, luxury resort vacation homes, or single-family dwellings in highly regarded communities was only available to accredited investors or those with deep pockets. But fractional ownership allows individuals to reap the benefits of these long-term investments with a smaller outgo and stake. And as the property value rises, so do each individual investor’s returns.
The advent of new-age investment platforms like Maihomm has made the process of fractional investing in real estate assets practically frictionless. With technological and data-driven solutions, investors are enabled to have high-value investments in real estate properties in a few minutes, and usually in their own comfort.
Fractional real estate investing can differ depending on the group of investors or organizations you invest with. Fractional real estate may mean that you get a deed and equity in the property, but it may also mean that you can buy shares in a property. In this latter case, the property is typically operated by a management firm, making it more of a turnkey operation for owners.
In some cases, your fractional ownership interest entitles you to stay in the property, say, for vacation, for a portion of the year. In other cases, you can invest in the properties with no intent to actually stay in them. In either case, you can enjoy the benefits of ownership while someone else does the heavy lifting of managing the property and preparing it for the next guests.
Bottom line
Is fractional real estate investment something you find interesting? Check out our website to see how you can get started. Maihomm is out to make fractional real estate investment accessible to all, you can start your investment journey with us today.