What Is Fractional Investing in Real Estate?
There are numerous methods of investing in real estate nowadays. Did you know that you don’t have to buy a property outright in order to reap the benefits of investment? That’s right—with fractional investing, you can purchase shares in commercial or residential property and earn passive income.
How Does It Work?
When you invest fractionally in real estate, you’re purchasing a “fractional share” of property from a company. Sometimes there are just a few investors, and other times there may be hundreds. Investors receive a portion of the cash flow from rent paid by the leesees. It is truly passive income, as you don’t have to deal with property management duties—those are the company’s responsibility.
Commercial vs. Personal Property Investments
As a fractional investor, you can choose to invest in commercial or personal property. You are likely already familiar with the personal property model: in most cases, it’s a vacation property, and the investors receive either time or space occupancy. You own the property alongside other owners, and you all benefit from its appreciation. In other words, it’s a timeshare purchase.
Commercial fractional investing, however, is quite different. You don’t receive any time occupancy; rather, you get the rights to a prorated amount of the property’s rent cash flow.
Pros and Cons of Fractional Investments
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Have More Questions About Real Estate?
The Law Office of Joseph Marino, PC is here to help guide you through complicated real estate dealings, whether you’re buying or selling. We provide sound advice in many specialized areas of residential and commercial real estate. Give us a call today to learn more about how our law office can tackle legal challenges you might be facing.
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