A lot of folks out there have this dream of owning something they can call their own, like a house or a car. They put in a ton of effort and save up every penny they can to make it happen. But let me tell you, it can take years and years of diligent saving before they've got enough dough to make that dream a reality.

Ever thought about a faster, cheaper way to prove you own a property or asset? Picture this: you could own just a piece of it and still get some sweet returns from that fraction of ownership. Pretty cool, right?

I've got some exciting news for you if you've been on the lookout for a way to own a piece of real estate. There's this cool thing called fractional ownership that's taking the real estate world by storm! Basically, it's a new way to own a fraction of a property instead of the whole thing. Pretty neat, right?

You know how this whole pandemic has really messed up everyone's finances? Well, here's a cool idea that's come up - fractional ownership of commercial real estate. It's actually a pretty promising way to make safe investments. With fractional ownership, you can get daily returns and see your capital grow over time. It's especially great for regular folks like us who want to make some profitable investments. The best part? It's low risk and has high returns. Sounds like a blessing, right?

Hey there! Have you ever heard of the concept of fractional ownership in real estate? It's actually pretty interesting. Basically, instead of buying an entire property, you can own just a fraction of it. And it turns out that this idea is really catching on.
If we take a look at the overall portfolios of different fractional ownership companies, they initially ranged from Rs 30 crores to Rs 40 crores. But now, each of these companies has grown to a whopping $100 million! This means that the top four operators in this sector collectively control a market worth about $400 million. And when you consider that each participant's ownership share costs between Rs 5 lakhs and Rs 10 lakhs, you can imagine just how significant this market size is.
Now, you might be wondering how fractional ownership can benefit ordinary people like you and me. Well, keep reading to find out more!

What is Fractional Ownership, and How Does It Work?

Fractional ownership is basically when you and a bunch of other people chip in money to buy a property together instead of owning it all by yourselves. It's like a team effort where everyone owns a piece of the property together. So instead of being the only owner, you become one of the owners in a cool and easygoing way.

With this strategy, you can own property without feeling overwhelmed by the financial burden and actually make some money from your investment. You see, the asset you choose could be anything – a house, a store, a warehouse, or even a fancy jet, or a cool boat. Depending on how much you invest, you'll get a fair share of the profits and expenses related to these assets. It's a win-win situation for everyone involved!

Imagine this scenario in Bangalore, one of the most popular areas in the city. There's a fancy office building that is worth a whopping Rs 100 crore. It's so expensive that only rich folks, also known as High Networth Individuals (HNI), can afford to buy it because it requires a huge amount of money. Unfortunately, an average person with just Rs 10 Lakh doesn't stand a chance to own it.
But wait, what if a bunch of people team up and combine all their resources to make an offer for this Commercial Real Estate? Sounds interesting, right? That way, everyone gets to own a small piece of the office and shares the profits equally.
Now, here's the exciting part. As time passes, the value of real estate tends to go up. So, not only do these investors get rental returns, but they also have the potential to make long-term capital gains when they decide to sell their portion of the office in the future. It's like a win-win situation for everyone involved!

Fractional ownership of real estate is all about making ownership more accessible to people who may not have a lot of money. It basically lets you own a piece of a property instead of the whole thing.

When people want to buy and manage a property, they sometimes use this thing called a Specific Purpose Vehicle (SPV). It's basically a fancy term for a legal structure that helps with the process of fractional ownership in commercial real estate (CRE). Here's how it works: instead of one person or company owning the whole property, a bunch of investors can pool their money together through the SPV. Each investor then gets a piece of the pie in the form of shares in the SPV. And guess what? These shares represent ownership in the property that the SPV is holding. Pretty cool, huh?

Possible Models of Fractional Ownership

When it comes to choosing the perfect model for your property, you've got options! Consider the type of property you have, the tax situation specific to each model, and what works best for your budget.

Here are some potential fractional ownership models: 

Joint Ownership

• In this model, each person who co-owns the property has their own ownership rights and can use it. However, they can't do anything that would mess with the rights of the other owners. It's all about respecting each other's space and rights, you know?

• Just wanted to let you know that if you're co-owning a property with others, as long as you have the permission of the other co-owners, you're free to sell your shares in the property without any restrictions.

• So basically, the co-owners don't have an agreement where they get first dibs on buying the property.

Cooperative Model

• Imagine a group of investors coming together and deciding to buy assets, like property or stocks, under the name of their own cooperative society. So instead of individual investors making the purchases, they pool their resources and make the investments collectively. It's a way for them to work as a team and share in the benefits and risks of owning those assets. Pretty cool, right?

• Basically, if you want to invest with us, you need to be part of the society and also own a fraction of the properties. It's like being a member and a co-owner at the same time.

• So basically, if someone who owns a fraction of a property decides to sell their shares, those shares will then be transferred to the new owner who buys them.

Company Structure

• With this investment strategy, what you do is you create a company and then use that company to buy assets.

• So here's the deal, the company has to follow all the rules and regulations set by the Company Act.

• The reason why this option is better than the first two is because you won't have to worry about paying stamp duty.

• Well, let me tell you about this model. It actually has a bunch of different responsibilities that makes it stand out.

Trust Structure

• All the investors who are interested come together and set up a single trust. The person selling the property acts as the one who creates the trust.

• When a seller follows specific instructions, it benefits all the fractional owners involved in the deed.

• If you're looking to gain some tax advantages, one way to go about it is by setting up an offshore trust in a country where India has a tax treaty. This model can help you out with tax-related matters.

Wrapping Up

You know that saying, "the rich get richer and the poor get poorer"? Well, it turns out that it might be true when it comes to investment opportunities in our country. Things like Commercial Real Estate (CRE) have always seemed out of reach for regular folks like us, and only the wealthy High Net Worth Individuals (HNIs) could afford it. But here's the good news: fractional ownership has come along and made the CRE industry more accessible to everyday people.