Fractional Property
Investment
Fractional property investment, also known as fractional ownership, is when a property investor purchases a share, or fraction, of the property. In this way, multiple investors can collectively purchase and own a property.
Why choose fractional ownership?
Fractional ownership allows more people to invest in the property, by sharing the costs of ownership, while also providing the benefits of property ownership such as capital appreciation, rental income, and personal use if applicable.
For GPFG clients, the top reasons they give for choosing fractional property investment are:
- Accessibility. Fractional ownership opens premium real estate to more investors, allowing shared ownership of luxury properties.
- Flexibility. Investors can choose their investment size, suitable for both new and experienced investors.
- Passive Income. High-quality, well-located properties ensure strong rental yields, at the same rate as full ownership.
- Simplicity. All property management tasks are handled by a service team, offering a hassle-free investment.
How does fractional ownership in property work?
With fractional ownership, the company selling the asset or property divides the cost of the property into fractions, or shares that can be sold to investors.
- 1
Purchasing Shares
Investors buy fractions or shares of the property, which equates to part ownership. These shares are offered by companies specialising in fractional property investments.
- 2
Earning Rental Income
As a part-owner, you are entitled to a share of the income generated from renting out the property. This provides a regular source of passive income.
- 3
Property Management
Fractional investors are not responsible for maintenance or upkeep of the property. These services are generally handled by a property manager.
- 4
Capital Return Potential
Besides rental income, there's an opportunity for capital gain. When the property's value increases, so does the value of your shares.
- 5
Selling Your Shares
You can opt to sell your shares either when the property is sold or at a time of your choosing. This sale can potentially yield a return based on the appreciated value of the property.
**It is important to note that since we deal with overseas investments, many of our investors purchase leasehold units, which may not have capital returns, depending on the time left on the lease. For capital returns and selling your shares, our team is always happy to discuss terms for extensions, exit strategies, and how to maximise ROI.
What are the benefits of fractional
property investment?
Fractional property investment offers several benefits that traditional property investment cannot match.
Lower entry point
Investors are buying shares in a property, rather than having to save for a large deposit and take out a significant investment loan.
Flexibility
Investors have options for how much they want to invest, depending on what's available. With GPFG, our fractional investment opportunities are divided into 25%, 50% or 75% of the unit value.
ROI and capital appreciation
Just like traditional investments, fractional investors still receive income and capital growth of their property. Fractional investment has the same potential earning benefits of investing in a whole property, directly relative to the amount invested.
No hassle
Since you don't actually own the property, you are not responsible for the day-to-day maintenance or tenants. Depending on the contract, the property manager or company distributing the shares will handle these items independently, or require a small, one-time or yearly fee.
Portfolio diversification
With the lower price points, investors can diversify their funds across a wide portfolio of properties. Fractional investment is a simple and efficient way for investors to get exposure to a range of properties and mitigate risk through diversification.
Prime Real Estate Access
Fractional ownership allows investment in top-tier properties in sought-after areas, which usually aren’t available to small-scale investors.
Personal Enjoyment
Depending on the investment terms, Investors can enjoy personal access to their property, which is appealing in tourist hotspots like Bali and Thailand.
Tax Benefits
Fractional ownership may offer tax advantages, the same as property investment. GPFG provides Depreciation Schedules and expert tax advice to maximise these benefits for investors.