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Fractional Investment Model: A New Approach to Real Estate Investment
Investing in real estate has always been regarded as one of the most profitable but capital-intensive ventures. For many, the initial costs of buying properties have made it a distant dream to ever own a property. It was fractional investment- the process whereby two or more investors own shares in one property- that played a pivotal role in making real estate ownership within reach of any investor. The process democratizes real estate markets such that it becomes much easier for one to find other participation opportunities in the real estate world.
What Is Fractional Investment?
Fractional investment lets individuals pool together their resources for the collective purchase of high-value assets such as real estate. Each investor would then have an equal proportion of the property with all its advantages, such as rental income and potential appreciation without the financial burdens.
How does the Fractional Investment Model work?
Property selection: High-value properties are located and filtered using a platform or investment company based on returns and growth prospects.
Fractional ownership offering: The property is broken down into shares or units and sold to an investor in fractional form.
Ownership structure: Investor shares are documented, mostly through SPVs or trusts.
Rental income distribution: Rental income is distributed proportionately to investors, based on the ownership share of each investor.
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