Fractional Investment in Real Estate: What is It?

Fractional Investment in Real Estate: What is It?

Not everyone has the investment resources of a certain real estate tycoon turned president, and that has often served as a bar to participation. In modern times, as real estate projects seek more and more investment, the solution has been to expand the class of those able to invest, bringing in new capital from investors who might not, as individuals, have the means to invest in high-end real estate. Enter fractional ownership of real estate – smaller investments from larger numbers of investors. This vehicle for investment can make the dream of serious real estate investment a reality.

 

The concept is simple – multiple investors each purchase percentage ownership in an asset. The real estate asset is usually high-end commercial property, but fractional ownership is taking place in other real estate arenas as well, such as vacation homes. The idea is that a vacation home isn’t used by one family all year, so dividing the cost among several families who then divide the time makes sense. Not only is the cost of the real estate asset divided among investors, but the maintenance and other fees are as well, making the financial commitment more manageable.

 

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