What is fractional investment?
In Fractional Investment, a number of investors join together and pool in funds to invest in Grade-A, high-return commercial real estate assets so that all of them can benefit from a share of the income that the asset generates, and can enjoy the profits from any appreciation in the value of the property.
Who can invest in commercial real estate via fractional investment?
Any Indian citizen or Non Resident Indian is entitled to benefit from factional ownership of real estate. Investments from institutions are also accepted. It is imperative that all standard regulations are followed before proceeding with the investment.
Note for NRI investors: Non Resident Indian (NRI) investors can only invest through an NRO Account or from a normal savings bank account in India. Payments from NRE Accounts or in FDI cannot be accepted.
What are the mandatory prerequisite documents?
The following documentation is compulsory to become a fractional owner of real estate:
- PAN Card
- Address Proof (Aadhar/Driver's License/Passport).
- Cancelled cheque leaf with the name printed.
- 16 digit demat account number.
Can I invest in more than one property and have a portfolio?
Yes, definitely. One can invest in as many properties as they like and build a diversified portfolio which can be spread across various opportunities and locations.
How does a property get listed?
Before a property is listed on the host's listing platform, a specialized team of experts run various data analytics as well as financial models to scope out and zero in on properties that can maximize returns for the investors.
The fractional ownership structure is designed in such a way that the ownership itself is not dependent on any single individual. Your ownership, governance and compliance records are stored in public databases as well as in government records. All investments remain completely secure.
How the hosting platforms you keep my personal information secure?
Data security and privacy are of utmost priority for all fractional investment hosting real estate platforms. They have the best-in-class security and privacy features in mind.
All data is hosted on secure cloud networks and all sensitive client data is encrypted and stored with 256 bit SHA encryption. No data is ever shared with any third parties.
Should I engage with an attorney or lawyer?
The hosting platform takes care of all legal due diligence on the client's behalf, so there's no need to engage with an attorney or lawyer. If one does wish to engage a legal resource, the hosting platform will be available for assistance.
What is the minimum investment?
The minimum investment is as per the lowest unit cost of the property and varies from property to property. An interested investor must refer to the individual property pages on the hosting platform to find the minimum investment price.
What happens if a property fails to be fully funded?
Any funds that have been committed by investors will be reimbursed to the registered bank account if a property on the hosting platform fails to complete its funding target.
How are the investments structured?
Investments are structured as private limited companies. For each investment, a Specific Purpose Vehicle (SPV) is created in which funds are raised to own and manage the property. An investor will own shares of the SPV holding the property and represent their investment. The property hosting platform assumes responsibility for oversight, reporting, and major decisions on behalf of the investors.
What is the investment process?
Once an investor's account is KYC verified, he/she can invest in any property listed on the hosting platform. To do so they need to e-sign a binding Expression of Interest and transfer the initial token advance of your investment amount to their virtual account to block the investment.
Once a property has been fully funded, an investor will be required to transfer the remaining amount into his/her virtual account. The amount will then be transferred to the SPV account and the SPV will proceed to purchase the property.
The ownership and property management agreement will be shared with an investor and once he/she approves and executes it, the investment is finalized along with details of the investor's shareholding in the SPV.
Are investors allowed to see the rental agreement?
Lease/Rental Agreement is shared with the investors so complete transparency is assured.
What sort of returns can I expect?
While no return is ever guaranteed, the expected return as per market standards is 14%-20% IRR over a period of 5 years.
