Frequently asked questions

What is fractional ownership, and how does it work?
Fractional ownership allows multiple investors to collectively own a high-value property. Each investor holds a fraction of the property’s title and shares in benefits such as rental income, appreciation potential, and personal usage rights. This approach makes premium real estate more accessible by distributing costs and ownership among several parties.

What proof of ownership do fractional investors receive?
Investors become fractional owners through a Special Purpose Vehicle (SPV) that holds the property’s title. Each investor’s fractional share grants them equal legal ownership rights and entitlements associated with the property.

What types of returns can investors expect?
There are generally two forms of returns:

• Capital Gains: These arise from the property’s value appreciation over time and depend on market conditions.

• Rental Yields: Investors can earn rental income once their full investment is made. Rental returns begin to accrue only after the completion of all installments.

Are there tax implications for fractional owners?
Fractional owners are responsible for paying property tax on their share of the property. Rental income and any gains are subject to taxation according to the investor’s personal income tax slab.

What due diligence is performed before selecting a property?
A thorough due diligence process covers four key areas:

• Property: Examination of property details, permits, architectural plans, and title reports.

• Market: Analysis of the surrounding area, market trends, demographics, and comparable properties.

• Legal: Review of legal structures, ownership rights, and contractual obligations.

• Earning Potential: Assessment of the property’s suitability for various business models to maximize returns.

What are the risks associated with fractional real estate investments?
Although relatively low-risk, fractional investments may still be affected by factors such as property price fluctuations, market conditions, tenant-related issues, and liquidity challenges. Proper due diligence, well-structured contracts, and stable tenants help mitigate these risks.

Is fractional ownership risky?
Fractional ownership is considered a stable investment model with a favorable risk-to-return ratio. While no investment is entirely without risk, fractional real estate tends to be less volatile than many other asset classes, thanks to careful property selection, secure tenancy arrangements, and transparent management practices.

What is fractional real estate investment?
Fractional real estate investment involves legally sharing ownership of a property among multiple investors. Each investor holds a fractional interest in the asset, reaping rewards through monthly rental income and long-term capital appreciation.