Fractional real estate investing is a relatively new investment tool for Indians. Although an exciting proposition, there are also a lot of misconceptions about the space. This article aims to bust these myths and bring light to the benefits investors can actively enjoy as fractional owners of A-grade commercial real estate.
Table of Contents
Myth 1: Fractional Ownership Involves a Lot of Hassle
Truth: This is not always true, especially if you do your due diligence. When it comes to buying fractional units in commercial real estate, the complexity of the process depends on the type of property, the seller, and the real estate organization that is facilitating it. For example, purchasing a fractional interest in a high-end luxury hotel is going to be a lot more complex than buying into an office building.
The entire process can also vary from one organization to another. In some cases, buyers only have the option of signing the offer letter and paying the pre-determined deposit amount to book their unit.
Myth 2: Fractional Real Estate Investing Involves High Upfront Capital
Truth: This is a myth. In fact, the minimum amount required to buy fractional units in commercial real estate varies from project to project. Also, sometimes you can get attractive payment options so that you don’t have to pay the entire purchase price upfront. For example, Myre Capital, the leading fractional commercial real estate investment platform in India, provides investment options that are as low as 25 lakhs.
Myth 3: Fractional Ownership is the same as timeshare
Truth: Fractional ownership is NOT the same as Timeshare. Timeshare involves sharing a fixed number of weeks with other people in exchange for an annual fee. In contrast, fractional ownership is simply the purchase of a partial interest in an asset. Typically, fractional owners have access to their property 24 hours a day and enjoy all the benefits associated with the property.
Myth 4: Fractional real estate investing is illiquid
Truth: Many people think that buying a fractional interest in a property means they cannot sell their units as quickly as they bought them. This is not true because you can always get out of your investment by selling it to another buyer. In fact, selling a share of the property is logically much more accessible than sharing an entirety of it.
If you have purchased a fractional interest in an office building, for example, you can also sell your unit to another party who needs to relocate their business. The liquidity of your fractional investment also depends on the platform through which you are buying the property. For instance, Myre Capital provides its investors with multiple exit options with the help of its tech-driven platform.
Myth 5: Fractional real estate investing is synonymous with the resale market
Truth: Many people think that buying a fractional interest in commercial property means you are entering the resale market. This is not true because you do not need to wait for someone else to exit before you can benefit from your investment. You can sell your unit anytime, either back to the company or to another party through the secondary market.
Myth 6: Fractional real estate investing is not available in India
Truth: Fractional commercial real estate is accessible in almost every city of India, with some of the leading companies such as Myre Capital offering investment options in all major cities such as Mumbai, Pune, Delhi, and Bangalore. However, this concept is still not so popular among Indians who are used to buying big houses or single commercial investments.
Myth 7: Fractional real estate investing is not safe
Truth: Fractional real estate investments are as safe as your conventional investment. No matter which company you choose to invest in, they will always abide by the law and ensure that the property is adequately maintained. Also, Myre Capital has taken all necessary cautions to ensure that its investors’ interests are always protected.
Additional safeguards include the following:
- Regular property inspection by qualified experts
- Regular review of business plans and financial statements
- A transparent investment process with personalized dashboards