Of the many conveniences birthed by contemporary digital technology, democratized investing is truly transforming the finances of regular people. A great example of this is fractional real estate investment, which has lowered the barrier of entry into real estate investing.
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If you aren’t very familiar with fractional real estate ownership or investing, we’ve written this article for you. In it, we’ll introduce the concept in simple terms and let you know how to get involved and build wealth with it.
What is Fractional Real Estate Investment?
Fractional real estate investment happens when a group of people pool funds together to jointly invest in real estate assets (land, rental property, commercial spaces, etc.). So, instead of a piece of property being owned by a single person, multiple people co-own it because each of them contributed towards acquiring it.
In this investment model, the value of a person’s ownership stake in a property depends on the proportion of the total investment amount that he or she contributed. For example, if this person contributed 5% of the total invested amount, they will own 5% of the property.
Returns on investment (whether it’s rent or proceeds of resale) are also shared between stakeholders in accordance with the percentage of the investment they contributed.
Fractional Real Estate Investment Platforms in Nigeria
Over the past few years, several startups have arisen in the fractional ownership segment. The better-known ones include Risevest’s real estate offering, Keble, WealthNG real estate, Cribstock, Ownjointly, and Fragvest.
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Risevest enables its users to invest in real estate located in the United States. Keble’s investments have historically been in Nigeria, the UK, and the UAE. WealthNG is focused solely on property investments in Nigeria.
More PropTech platforms continue to emerge in this niche, as demand for their services increases.
How to Invest in Fractional Real Estate
If you’d like to invest in fractional real estate with any of the platforms listed above (or any others that may exist), here’s how to get started.
Set an Investment Goal
Decide what goals you want to achieve with your investments. How much money are you willing to commit? Are you looking to grow long-term wealth? Or will your investments fund a shorter-term target, like school fees for your children, the purchase of a new car, or a holiday trip abroad? The nature of your goal will determine the investment vehicle and duration you’re going to stick with.
Do Due Diligence
Visit the websites of fractional real estate investment companies to learn what they’re actually offering. Then have a look at the reviews and ratings for their apps on app stores (e.g. Google Play Store or Apple Store). Those reviews often reflect the experience of existing users of those platforms. Also, only invest in startups that are duly registered with the appropriate authorities.
Invest
Having walked the first two steps, you should be able to choose the fractional real estate ownership provider that meets your specific needs. It’s typical that you will have to register with a platform before using its services. They will likely request KYC details such as government-issued ID, utility bills, and basic banking details. Make sure to supply these, as they help with security and compliance.
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Final Words
This concludes our short explainer. Knowing how to invest in fractional real estate will enable you to select the right PropTech for your budget and goals. It should take you closer to creating and preserving wealth in a manner that was once only available to the rich.
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