Fractional real estate investing is a strategy that allows investors to own a portion or share of a property, rather than the entire property. This approach provides an opportunity to enter the real estate market with limited funds and without the burden of owning and maintaining a whole property.
Pros and Cons of Fractional Real Estate Investing
Fractional real estate investing has its advantages and disadvantages. On the positive side, it can provide a way to boost passive income, diversify investment portfolios, and gain exposure to real estate without large amounts of capital.
However, it also comes with its challenges, such as less liquidity compared to fractional shares of stocks and ETFs, and the need to carefully consider individual goals and financial situations before jumping in
Lower Cost-of-Entry and Time Commitment
Fractional ownership of investment properties can lower the cost-of-entry and time commitment for real estate investors. This approach makes it easier to become a rental property owner, especially for those who may not have the resources to purchase an entire property.
Access to High-Value Deal
Fractional real estate investing can provide access to high-value deals that may otherwise be out of reach for individual investors. Some platforms offer opportunities to invest in 8-figure deals or single-asset multifamily properties.
Diversification and Portfolio Expansion
Fractional real estate investing can be a way to diversify investment portfolios and expand investment options. It allows investors to add real estate to their investment strategy without the need for large amounts of cash.
Platforms and Investment Opportunities
There are several platforms and companies that offer fractional real estate investment opportunities. Examples include Arrived, Fundrise, and Concrete.
These platforms provide a range of properties that have been pre-vetted based on their income potential, allowing investors to browse and select shares in properties that align with their investment goals.
Considerations and Qualifying Process
Before engaging in fractional real estate investing, it is important to consider individual goals, financial situations, and risk tolerance. Some platforms may have a qualifying process to ensure that investors are well-informed and prepared for the investment journey.
In summary, fractional real estate investing offers a way to enter the real estate market with limited funds and without the burden of owning and maintaining an entire property. It can provide opportunities for passive income, diversification, and access to high-value deals. However, it is important to carefully consider individual goals and financial situations before making any investment decisions.
