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Fractional ownership of real estate is a co-ownership framework where investors can invest in smaller fractions of property with relatively smaller amounts.
Fractional ownership allows investors to own properties with small investments and benefits from both capital appreciation and rental income.
Through this ownership, multiple investors can invest and have a combined ownership of any individual asset. This makes it easier for smaller investors to grab a share of prime properties.
This type of ownership is offered either through real estate investment trusts (REITs) and directly by developers through direct selling or web-based Fractional Ownership Platforms (FOPs).
Before investing in fractional ownership, it's important to understand the concept, benefits, limitations, and other terms and conditions.
Investors should also assess the valuation, potential rental earnings, and capital appreciation of underlying assets. They must also pre-assess returns on eventual exit and liquidation. With the increasing popularity of fractional ownership, retail investors must run a few checks before investing in such models.