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An Experts Guide To Earning Passive Income Via Fractional Ownership of Commercial Real Estate In India

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Isn’t it a dream to have a regular source of money without raising a finger? And if you’re prepared to engage in commercial real estate, you may produce a decent amount of passive income. You’re probably thinking, “That all sounds fantastic. But I’m not willing to sell my kidney and take a loan to invest in commercial real estate “. Jokes aside, that’s understandable. Commercial properties get values in crores. However, you may now generate passive income through commercial property fractional ownership.

 

Most individuals are unaware that they may invest in real estate either actively or passively. Real estate investing has become associated with one word: landlord. We’ve all heard terrible stories about landlords. Some refer to the “awful three T’s” – toilets, trash tenants. Despite the benefits of real estate investing, many people get put off by the prospect of answering phone calls at 2:00 a.m. After all, most individuals prefer to be investors rather than landlords. Creating passive income through real estate is likely a better match for such individuals.

Passive Income Is?

Passive income is becoming acknowledged as the ideal way to produce extra income, and establish retirement stability.  Ultimately, it builds financial independence.

But, what exactly is real estate passive income? When you invest in real estate passively, you supply someone with your money. Also, they do the work required for you. Easy Peasy Lemon Squeezy!

Examples include REITs, fractional ownership, and real estate crowdfunding in which you aren’t active participants. The essential point is that passive investment strategies require no effort on your part. Sounds tempting, doesn’t it?

 

Real estate passive income investment is profiting from property investment with zero participation. But, the level of activity and participation changes with the amount invested. Real estate incomes get generated through residential properties and REIT earnings. Real estate passive income sources offer a dividend, rental revenue, and interests with expansion.

 

Sure, rental houses are excellent assets. They are, however, not considered passive. Why is this so? Because you must invest all of your money, time, and energy into the property. Unlike commercial buildings, it is not only about money. Another motivation for commercial building investments is that their returns beat those of rental properties. Commercial structures frequently have a massive return on investment than residential buildings. Commercial properties get leased for more than ten years, with the money going to the owner. The ROI for residential property is around 4-10%, but the Return on Investment for commercial property is approximately 6-12%.

All set to start investing in commercial properties? Wait, hold on. Let us address the most critical question here. How will you put money into commercial real estate valued in crores when you only have lacs? Worry not for fractional ownership is here to turn your passive income dreams into a reality.

Fractional Ownership Is?

“But aren’t commercial properties pricey to invest in and requiring crores?” you might question. They are, after all, costly and get valued in crores. But, all because Joe lacks crores does not exclude Joe from commercial property investments. Be it just lacs, you can start investing. It is all a reality through fractional ownership and fractional ownership companies like Assetmonk. Assetmonk empowers an investor to put money into an office building for INR 10 L. You are unstoppable at this point.

 

Fractional ownership is a method of real estate investments without buying properties yet generating passive income. It empowers an investor to have a chunk of the commercial building plus enjoy the rewards with no initial investments. It is suitable for premium commercial properties. It is mostly suitable for an individual investor who cannot fund real estate. An investor purchases a part of a commercial building. They can then generate consistent rental earnings and build wealth. Commercial real estate is also gaining traction as a promising investment for small investors.

 

A group of investors like you, friends, and strangers can acquire high-quality commercial space in portions or fractions through fractional ownership. By investing in such a property, they hold shares of high-value commercial real estate. The ensuing profits and income are distributed to the fractional owners of the property. By providing for continuous cash flows and incentives, fractional ownership reduces a single investor’s financial hardship. Furthermore, by investing in a variety of commercial office buildings in various locations, investors diversify their portfolios.

However, because real estate isn’t liquid, you would prefer not to invest. WRONG. Yes, there is a dearth of liquidity in real estate. Fractional ownership, on the other hand, is not. In what way? The co-owner of a property can always resell and transfer his property portion to anyone. Whew!

How Exactly Can You Own Passive Income Via Fractional Ownership?

Commercial real estate has become scarce and not affordable for most individuals. Why is this so? Because they lack the crores necessary for commercial premises investments worth crores. However, fractional ownership comes to the rescue.

Fractional ownership comes with passive income because of the following reasons:

  • Accessibility: For instance, a premium office space leased in the Delhi NCR by Mastercard costs INR 500 crore. Such investment provides an annual rental income of Rs 60,000-Rs 1 lac. Such a large investment is available to the wealthy. But, the average investor is losing out on the high rental returns. Welp! But, fractional ownership now enables the average Joe to co-own that office space by investing a minimum of INR 10 Lacs and enjoy rental return earnings from 6% to 10% each year. Lower upfront capital gets made for fractional ownership. Because investors do not have to invest in any property in bulk, they can distribute their investible corpus over many properties and establish a well-diversified portfolio of diverse property assets. Property holdings provide several advantages. A well-diversified portfolio depends on the investor’s unique needs and investment perspective.

 

  • Stability: Commercial real estate is a solid asset with consistent returns that do not vary with the market, making it a reliable and secure investment. Furthermore, according to experts, the investment in fractional ownership is not tied in, and investors can quit whenever they choose. Not simply investing and managing the asset is the most challenging component of property investing. It is also about leaving. India’s Commercial real estate industry also declined during the closure but quickly recovered in the third quarter. Year on year, the net absorption rate of the commercial real estate industry climbed by 63%. Commercial property values will surge in the next years. As a result, it is a great moment to start investing in fractional ownership.

 

  • Tenants: The majority of commercial buildings are leased for extended periods and with stable tenants. The rental lease on a business property normally lasts three years, although it can get renewed. Banks, information technology organizations, and huge multinational corporations with massive budgets are tenants in Grade A premises; such tenants do not delay rent but pay on time. Their fractional portfolio’s investment in rent-generating assets creates a constant, long-term revenue stream. This long-term investment can provide individuals with enough consistent income to become economically secure. Furthermore, because of the effort, money, and time in transforming the apartments into offices, such tenants typically extend their renting term.

 

  • Rent Income: Through continual rental revenue and appreciation, commercial property fractional ownership gives a positive ROI or return on investment. Fractional ownership provides a growing rate of return, constant rental revenue, and capital appreciation. Commercial property in India gave a 16 percent CAGR over the previous five years. Apart from the growth in capital value, investing with reputed tech-enabled real estate investment platforms like Assetmonk may result in a 15 percent rise in the rental return every 3 years. Also, it gets incorporated into the rental agreement to hedge from future inflation, assuring that your money invested remains safe with time.
  • Investment Appreciation: Owning a fraction of commercial property gets cost-effective. It also provides a double return. The first return is the benefit of direct investment returns. The second return is commercial space appreciation. Because Joe owns a piece of commercial real estate, the worth of his stake will rise as well. It’s well-known for its institutional investments. However, it is a legitimate investment option for the average investor.

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