When it comes to investment, people are drawn to a diverse array of investment options, ranging from traditional stocks to innovative avenues like fractional property ownership.
While stocks have long been a popular choice, fractional ownership investment presents a unique opportunity to benefit from real estate assets in smaller portions. This appeals to a wide range of investors, from experienced individuals seeking to diversify their portfolios to affluent newcomers looking for alternative avenues.
In this blog, we will walk you through why fractional ownership is better than stocks in today’s financial landscape.
What Is Fractional Ownership?
In fractional ownership, various investors come together and pool their money to buy top-quality commercial or residential real estate. Each investor gets a certain portion of the equities of the Special Purpose Vehicle (SPV) that owns the property, granting them a proportional stake in ownership. This collaborative method makes investing in sizable properties achievable for a broader range of participants.
Advantages of Fractional Ownership
Following are some of the benefits of fractional ownership that make it a smart investment choice for you:
- Access to High-Value Properties
It enables you to invest in high-quality real estate properties that might have been financially out of reach through traditional ownership. This means you can own a portion of equities of the SPV, holding property such as office buildings, retail spaces or industrial warehouses in desirable locations, giving you exposure to valuable real estate assets.
- Lower Investment Costs
Fractional ownership reduces the capital required to invest in real estate. Instead of buying an entire property, you can invest in a fraction or a share of it, making it more accessible for investors with smaller budgets.
- Professional Management
Many fractional ownership platforms partner with professional property management services, specifically tailored for commercial real estate. These services handle tasks such as tenant leasing, property maintenance and asset optimisation, ensuring that the property is well-managed and maximising its potential for rental income or resale value.
- Flexibility and Easy Selling
With fractional ownership, you have the flexibility to sell your share in the property if you want to cash out. This gives you the freedom to adjust your investment strategy, refine your portfolio or take advantage of changes in the market.
How Is Fractional Ownership Better Than Stocks?
Fractional ownership offers several advantages over traditional stock ownership, making it a compelling option for investors. Here is why you should invest in fractional ownership over stocks:
- Steady Returns
Stock market earnings rely on market ups and downs, which is highly unpredictable. However, with fractional ownership, returns stay stable over time. Furthermore, fractional ownership lets investors put money into top-notch properties leased to big companies. Long lease deals mean investors get a steady stream of rental income.
- Multiple Benefits
Fractional ownership comes with multiple perks, including income from monthly rent and asset value growth when selling. This unique blend of income stream and capital appreciation distinguishes it as a superior investment choice compared to stocks.
- Smart Research
When investing in the stock market, you usually spend a lot of time researching companies. However, with fractional ownership, real estate experts handle the research, ensuring good property deals. Properties listed for fractional ownership go through a strict evaluation to guarantee high returns.
- Diverse Opportunities
Diversification is another perk of fractional ownership. Unlike stocks, where all investments are tied to market trends, fractional ownership lets you spread your money across different properties in various places and sectors, reducing overall risk.
The Bottom Line
Overall, fractional ownership is considered better than stocks by several expert investors due to its ability to provide stable returns, in terms of consistent rental income and potential asset value growth. Fractional investment in real estate allows diversification across various properties and sectors, reducing overall investment risk. Moreover, the research process associated with fractional ownership is streamlined, thanks to expert inputs.
Speaking of experts, Aurum WiseX is one of the trusted investment platforms offering fractional ownership opportunities. Therefore, if you are looking for a smarter investment option, fractional ownership through Aurum WiseX could be the way to go.
Frequently Asked Questions
- Which investment option has more risk fractional ownership or stock?
Fractional ownership in real estate and stocks both carry risks. However, the level of risk for fractional ownership investments depends on factors such as market fluctuations, property management challenges, and legal complexities, while stocks face volatility, economic factors, and global events.
- How does fractional ownership work?
In fractional ownership, investors contribute funds to purchase a share of the SPV owning the real estate asset. Each investor holds a proportional stake in the asset and receives benefits such as rental income according to their ownership percentage.
- What are some of the benefits investors can expect from fractional ownership?
With fractional ownership, you will be able to invest in top A-grade properties with an affordable investment amount. Furthermore, you will be able to earn monthly rental income and leverage potential capital appreciation upon the sale of the asset.
