What Are Fractional Investments In Real Estate


If you are looking for new ways to invest your money and grow your wealth, one of the safer things to take on is real estate. Any type of real estate investment will help you grow your portfolio. It will diversify your money, give you better future mortgages, give you great tax deductions, etc. The biggest drawback of investing in real estate is the fact that not many people have the means or the funds to buy large properties. Real estate, though it is a great investment opportunity, is also one that comes at a high cost. Also, getting a huge loan from a bank does not always pay off in the way that the investors hope to see.

What are fractional investments

For people who want to invest in real estate but might not have the funds to do so on their right off the bat, there is another option known as fractional ownership or fractional investing. The lawyer specializing in regulatory affairs in Israel explains that by making a fractional real estate investment, you open yourself up to allowing multiple investors to buy a share of the asset and work together to turn it into a profitable investment.

What are the benefits

It allows you to start diversifying your money

When you decide to go with fractional ownership on a real estate property, then you are giving yourself a way of putting your money in different places so that your investments can grow and turn into a handsome profit. You might not be the sole investor of a real estate property, but doing fractional ownership in a few different projects gives you more than one stream of new income coming back into your pocket.

It checks off all of the 3Ts of real estate

If you are not someone who wants to or is not able to solely take care of the 3ts of real estate (trash, toilets, and gross tenants) then going into one project with other investors helps to fraction off that responsibility which takes the financial burden off of you meaning it doesn’t hurt as bad when things need to get fixed or improved upon.

There are different fractional ownership options in the real estate world

If you are looking at the real estate options, then you will see that there are two primary types of fractional ownership in real estate. These two options are known as Delaware Statutory Trust or DST and the Tenant in common (TIC) fractional ownership. These two options have gained popularity over the last few years because it allows investors to own property that is either commercial or residential real estate properties depending on what their goals are for the income they want to generate.

TICs explained

The TIC option of fractional ownership came about in 1990 and has become more and more popular with every passing year. With this option, each investor owns their own piece of interest in a large singular piece of property. This option means that each investor has a stronger buying power and has to take on fewer costs that incur with the property, and each investor shares equal responsibility to take care of the property.

DSTs explained

DSTs have become more popular over the last few recent years because investors know that they can get a property with secure financing and low minimums on how much they have to invest. This means beginning investors who do not have much to put into the property can still incest what they have and create a new income stream for themselves. It is a great option whether you are going to with a huge portion of the fractional ownership or if you can only buy into a very small amount.

Whether you decide to go with a DST or a TIC option, it is no secret that fractional ownership is a great way to get yourself into the real estate door and start diversifying your money and building new income streams.

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