Home Ownership... One Brick at A Time
Updated: Apr 12, 2020
FRACTIONAL OWNERSHIP IN PROPERTY
Fractional ownership is exactly what the name describes. It’s an ownership structure where multiple people agree to share in the costs, risks, usage, and returns of an asset in order to reap the benefits of something that is too cost prohibitive to purchase.
This style of investment is particularly enticing to Gen Y (24-38), as getting a foot in the property market, remains high on their list of priorities. And for aspiring home owners it’s an investment that can help build a deposit. It’s also seen as a viable option to tackle the issue of housing affordability by allowing fractional property investors to own part of a house or apartment and take on its long-term rental.
One of the biggest advantages of fractional investment is the low barrier to entry when compared to traditional property investment. Investors don’t need to save 10-20% of a property’s value as a deposit - they can own a share of a property for a very small initial outlay.
Australia is now ranked as the third least affordable country for housing, according to the 14th Annual Demographia International Housing Affordability Survey, with people paying up to 13 times their annual income to purchase a home. Therefore in this environment fractional investment offers an alternative to laying out a large amount of money to get into the housing market. And with experts estimating that fractional property ownership could account for 10 per cent to 20 per cent of Australia’s property market within the next decade it is a great time to explore the opportunity.
However, like any investment, the pros and cons have to be weighed up and well researched consideration given as to whether it’s right for you.
Benefits In Fractional Investing
Securing an investment in a real home allows the buyer to track the local property market, which has historically delivered significant capital growth and can help buyers build a deposit for their own home.Risk is relatively low as the amount you invest is low Fractional ownership will also allow first home buyers to get exposure to property much earlier in their quest to own a home, ensuring their early investments move with property prices.With fractional property investment investors can purchase shares in a range of properties with different rental yields and capital growth to create a diversified portfolio. Traditionally, this would require huge amounts of capital to achieve but is made possible through fractional investment due to relatively small initial outlays.
Fractional ownership investment is certainly a viable and beneficial venture but be sure to do your research and get professional advice. Get in touch via email firstname.lastname@example.org, give me a call on 0411 44 34 23 or DM me for a no obligation chat about fractional ownership opportunities and how it can work for you.