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While the idea underlying fractional property investing has been around for a while, it’s become democratized thanks to PropTech. Digital platforms that connect the masses to enticing real estate offers have sprung up in the past few years, and have onboarded tens of thousands of people looking to grow their wealth. In this article, we’ll talk about what these platforms are, how they work, their benefits, and what you should look out for when trying to invest in one of them.
What is Fractional Property Investment?
Fractional property investment happens when multiple investors have shared ownership of a real estate asset. They could each own a percentage of a property, and reap returns on that property commensurate with their share of it. For example, 100 people may invest in a single house, have it rented out, and each earns a share of the rent that’s paid by tenants.How PropTech Enables Fractional Property Investment
Several digital platforms have made fractional real estate investments available to Nigerians. They are doing this by leveraging websites and apps to pool investments from thousands of people, often scattered across the country. Then they purchase property with these funds, rent them out, collect payments from tenants, and deliver returns to investors based on their share of the initial contributions. These returns are also paid out via the website or app; investors may proceed to withdraw them to their personal bank accounts or reinvest them in new opportunities.Examples of Fractional Property Investment Platforms
Well-known platforms in this category that serve Nigerians include RiseVest, WealthNG, Coreum, and Keble. Some of these grant users access to local real estate markets, while others present real estate assets from abroad (e.g. the USA and the UK). Minimum investments vary, but some allow you to own a share of property for as low as $10.Benefits of Fractional Property Investment
The following are benefits you could gain from pursuing fractional real estate investments:- It costs much less to begin investing than you’ll find with traditional real estate
- You have access to a wide range of investment opportunities
- Returns are sometimes quite impressive
- Digital platforms make investing easy
- You could plug into high-end property markets, which would otherwise cost a fortune to get involved with
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Things You Should Consider Before Investing in Fractional Property
Here are some things you should think about before deciding to place your money with a fractional property investment platform:Your Investment Goals
The sort of returns you’re looking for will determine the sort of investment vehicle that’s right for you. Real estate investment apps have varying minimum investment outlays and promise differing returns. You will sometimes find an assortment of offers on a single platform. The amount of funds available to you could also play a big role in your decision to invest.The Integrity of the Platform
While several legitimate real estate investment websites and apps exist, you must be careful not to fall for scams. Do due diligence by examining the background of the companies offering fractional property investments. Ascertain that they are duly registered with the appropriate authorities, try to find existing users, and read reviews to know what kind of service you should expect from them.Management Fees
Companies that facilitate fractional property investment may demand a management fee or take some other kind of charge. You should find out what fees they deduct, and decide whether they’re worthwhile.Location of Property
The sort of profit you can reap from a property partly depends on where it’s located. If it’s situated in a district with high demand for real estate or historically high returns, you’re likely to get a good deal out of your investment.Register to attend the CN Business Mixer
Final Words
Fractional real estate investment has opened up opportunities to the public that were once reserved for the rich and powerful. With just a few thousand naira, you can begin your foray into lucrative real estate markets and garner a decent profit to yourself. We have given you a brief introduction to it. Now it’s up to you to explore things further, and maybe invest with a platform that suits you.Featured Image Source: Agent Device
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