Fractional Ownership: The Secret To Minimal Risk and Financial Freedom in 20236 Jan, 2022
Let’s do what we enjoy while the money keeps flowing into our bank account every month. Love the sound of it? Good news. It is achievable too. Try ‘Fractional Ownership’.
What is Fractional Ownership?
Fractional Ownership is a percentage ownership of a high-value tangible asset wherein several unrelated individuals can own ‘fractions’ of an asset and enjoy the returns and capital appreciation proportionately. The risk in fractional property investment, however, is mitigated to a large extent.
Consider a well-managed pre-leased commercial real estate. As it is occupied, the monthly rentals will ensure a steady income flow. Further, the furnishing, fit outs, and shared services such as concierge, technical support, etc. are paid for by the tenants resulting in multiple income streams. The rental agreements come with a lock-in period of three to five years, so the revenue is assured and recurring in nature. Also, the companies which occupy such premium real estate are reputed firms with very good credit ratings hence less chance of default.
What will the value of my fractional ownership properties be in five years?
Let’s say you invest INR 25 Lakhs to own a ‘fraction’ of premium commercial real estate. Let us assume rental yield at 8% per annum which is higher than the interest earned through a savings account, fixed deposit, or any other fixed income assets. The return per year on your investment would be ~INR 2 Lakhs and increasing by 4-5% every year.
The premium real estate occupied by reputed companies would be in a very accessible and popular part of the city and may appreciate at around 5-7% per annum. Hence, in five years, the value of your fractional ownership commercial real estate would appreciate to INR 31-36 Lakhs ,depending on capital appreciation.
The total return of your fractional property investment in five years would be at least INR 41- 46 Lakh, assuming no rental escalation and a capital appreciation of 5-7% Lakhs which is ~60-80% return on investment in 5 years. Such returns can easily compete with the best financial instruments available in the market today.
How can Fractional ownership in real estate set you on the path to Financial Freedom?
Compounding, they say, is the eighth wonder of the world. If you start re-investing your returns into fractional ownership in real estate, you will own multiple ‘fractions’ over time and it would create multiple recurring revenue streams. The best part is that these returns are hassle-free and managed by a professional ‘fractional ownership’ platform on your behalf while you enjoy transparent and clear insights on the returns that you make.
These multiple income streams may soon set you on a path to ‘financial freedom’ – which means that your fractional property investments will yield more returns than the cost and expenses that you incur every month.
With ‘fractional ownership in real estate’, you can embark on a journey to financial freedom – hassle-free and with very less risk. What more can you ask for as an individual investor?
What makes fractional property investment a lucrative investment option in 2023 ?
- Relatively Low-Risk Investment: The clear mantra in the financial markets is that the greater the risk, the greater is the return. However, in the case of fractional ownership commercial real estate, the downside risks are limited. With professionally managed companies taking care of your ‘fractions’, you can sit back and enjoy the show. There are very few investments that return more than 10% per annum over five years with limited risk, hence ‘fractional ownership in real estate’ is a rarity.
- Build your corpus of Emergency funds from fractional ownership properties: The steady return that you generate from fractional ownership properties can be left untouched and used as a corpus to navigate a ‘rainy day’. An emergency such as an accident, health issue, etc. will come unannounced. However, becoming prepared for it financially is in your hands and fractional ownership properties are a very positive step towards it.
- Enhance Real-Returns on your investments: Inflation at around 5% normally eats into the real returns that you make on your investments. Hence, any investment which returns less than 5% doesn’t add much value to the real returns that you make. Your savings account in most banks in India may return 4% or even less per annum. A Fixed Deposit at 6%-7% may just beat inflation but is still not efficient in terms of returns. On the other hand, fractional ownership properties can enable you to beat inflation with real returns. Why not make your money as responsible and hardworking as you are? Start with fractional ownership in real estate today. It is better explained in the table below and the additional amount that you might make on your fractional property investment over a five-year period is significant.
Isn’t it just fantastic that you will make more than Rs. 10 Lakh over five years with fractional ownership than in a Fixed deposit if you invest Rs. 25 Lakhs? It’s time to give it some serious thought.
Kick ‘compromise’ out of the window: No more compromises in life. Send your children to the best schools. Fund your dream house, car, or electronic gadget today. It's time to go the ‘fractional ownership’ way, attain financial freedom and create a happy future for your family and you.
Frequently Asked Questions
Q1. How to find the best fractional ownership properties in India?
If you're looking to invest in best fractional ownership properties in India, here are some tips to help you find the best ones:
- Do your research
- Check the reputation of the developer
- Check the property documents
- Check the amenities and services
- Consider the location
- Seek professional advice
Q2. What is fractional ownership property?
Fractional ownership property is a concept where multiple investors pool their money together to purchase a share in a property. Each investor owns a fraction of the property and is entitled to a proportionate share of the rental income and capital appreciation.
Q3. What are the tax implications of fractional property investment India?
The tax implications of fractional ownership in India depend on several factors, including the percentage of ownership, the type of property, and the duration of ownership. It is important to consult with a tax expert or financial advisor to understand the tax implications of fractional ownership in India and to ensure compliance with applicable tax laws.
Q4. How is rental income distributed in fractional ownership?
Rental income in fractional ownership properties is typically distributed among the investors based on their percentage of ownership in the property. The property management company, which is responsible for managing the property and collecting the rent, calculates the rental income and distributes it among the investors based on their share in the property.
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