Fractional Ownership The Intelligent Way of Owning Property in Modern Times

Real estate shows proposals for the calculation of labor resources. Among the endless alternatives to real estate investing, this is a solid long-term investment opportunity. It provides a good return on investment by creating wealth through rising asset prices, land scarcity, and high demand for commercial spaces. Asset ownership contributes to the creation of income and wealth. However, property rights have changed dramatically in recent years as business models continue to change. One of the most important examples is the fact that temporary reserves are not the only part of an investor's assets. But the high price of the asset has forbidden many media to average budgeted investors from investing in high-end commercial properties, nonetheless thanks to the concept of Fractional Property Ownership.

Getting to Understand Fractional Property Ownership

The general notion about real estate is that many investors with limited income sources can invest only in residential real estate properties. Whereas commercial properties or commercial real estate (CRE) were considered for High-Networth Individuals (HNIs). However, Fractional Property has enabled investors from every sector of society to get hold of a commercial property. But what exactly is this Fractional Property Investment?

It is very simple and works exclusively similarly to the fraction rule. Just like math, in Fractional Property Ownership also, the proprietorship of the asset is divided into equal shares which are owned by individual persons. These shares are called tickets and a person can buy more than one ticket. Suppose a property worth 50cr is divided into 50 equal tickets worth Rs. 10 lakh. Now with merely 10 lakhs in hand, a person can buy a high-end commercial property. Not just this, the person also gets access to the monthly rental yields in proportion to the shares.

For many years, Fractional Property Ownership has been an essential part of real estate investment in the Western world. In India too, it is gaining popularity slowly. However, many investors are still sceptical about the investment type. But let me assure you, this is a completely safe type of investment and this new-age investment is slowly emerging as a potential investment opportunity for many investors.

Fractional Property Ownership and Commercial Real Estate

The commercial real estate market is expected to grow 13-16% over the next five years as the share of commercial real estate holdings in India continues to grow. The fact that the government will support the growing demand for office space in the future, the growth of large institutional investors, and significant foreign investment in many commercial projects may be part of this anticipated boom. All of these aspects contribute to a strong increase in capital.

Commercial real estate usually consists of Class A properties that are leased by multinational corporations, banks, warehouses, factories, or large IT companies. Unlike tenants of residential properties, these organizations usually do not leave the building on short notice, which may create problems for the owners. On the other hand, the rent for the sale of commercial space is usually three years or more, so the source of income is for quite a long time. The main advantages of renting out commercial real estate are that the tenants pay your rent on time and also develop the entire area according to your requirements, thereby saving both your time and money. Also, there are high chances of carrying forward their lease by the tenants, allowing the investor to earn a stable income.

Fractional Property and Liquidity

Liquidity is the process of converting an asset into cash. Transferring the property and turning the asset into cash is not possible with a sole proprietorship. However, that is simply not the case with fractional property ownership.

One can transfer his/her share to any other person whenever required. With the transfer of share, the fractional ownership is also transferred to the other person who buys it, thereby allowing the previous owner to turn his asset into cash. Therefore we can safely conclude that fractional ownership of commercial real estate can easily be liquidated. However, this type of liberty is not available in the sole proprietorship of the property.

Things to Remember Before Investing in Fractional Property Investment

As safe it may sound, there can be fraud happening in and around the fraction property investment because of non-reliable sources of property. So you should keep the following points in mind before investing in the Fractional Property Ownership-

• You should always trust a reliable source for investment.

• You should always do thorough market research before investing.

• You should lookout for the best deals.

• You should make sure that the company you are entrusting should have adept customer-oriented feedback solutions and should listen to you deeply.

Therefore, in a nutshell, we can safely conclude that investing in CRE is certainly beneficial in the long run. Considering the current market scenario and post-pandemic effects, one must look out for solutions that are easy to invest in without getting burdened by bank loans or limited income sources.

About the Author: Yield Asset

Yield Assets is one of the best commercial property investment companies that provides the best real estate investment platform. Investing in pre-leased commercial property is one of the best investments that one can rely upon.