Imagine if you owned lavish office spaces.

You could earn lakhs as rent every month.

But it isn’t easy. Such properties cost crores.

You can, however, buy a part of them.

How? Through fractional real estate platforms (different from REITs).

A thread🧵

How does it work?

It starts with a company/platform identifying investable Grade A properties like commercial buildings or warehouses.

Such premium properties usually cost crores.

So, the company invites multiple investors to pool money.
After collecting money, the platform creates a Special Purpose Vehicle (SPV) to buy the property.

And the investors become shareholders in this SPV.

Examples of these companies/platforms include Strata, hBits, Property Share, etc.
How do these companies generate returns for investors? 🤔

There are two ways.

• One, they earn rent from the tenants, who are usually locked for a long-term lease.

• Two, capital appreciation from the property when they sell it.
What sort of returns can you expect?

Platforms like hBits and Strata promise 8-10% yearly rental returns on their listed assets.

Post capital appreciation, the overall average annual return they promise is 12-20% in the long term (typically 5 years).
Now, let’s discuss the cost.

They could be of two types:

One, you need to pay an asset management fee of around 1%.

Two, the platforms may take in a share of the profits if your returns exceed a particular number (hurdle rate).
A word of caution now.

This appealing investment option isn’t everybody’s cup of tea.

For most platforms, the minimum investment amount starts from Rs 25 lakh.

In addition, selling your investments won’t be easy.

Let’s understand why. ⬇️
To exit your investments, you need to find a buyer.

Now, these companies allow you to list your share of the property on their platform.

But there’s no guarantee that you will find one immediately.

So, liquidity can be a challenge.
There are several other risks that you need to know.

Like in the case of any property, fractional real estate ownership is exposed to risks like lease renewals, tenant defaulting on rent, occupancy challenges, etc.

Besides, there is no regulatory oversight.
How’s it different from REITs?

By now, you must have figured out several differences between the two.

You can check more details in the table below.
We have a detailed thread on REITs. You can read that as well. 🧵👇

https://t.co/nvuo43oOeQ
How to look at it?

Fractional real estate offers an alternative to diversify beyond mutual funds, stocks, bonds, gold, etc.

But do keep in mind the risks.

It makes sense to invest only when you already have a sizable portfolio of market-linked investments.
We put a lot of effort into creating such informative threads.

So, if you find this useful, show some love. ❤️

Please like, share, and retweet the first tweet.

For more threads, follow us.

Also, click on the bell icon in the profile section so you don't miss any threads.🔔

More from All

MASTER THREAD on Short Strangles.

Curated the best tweets from the best traders who are exceptional at managing strangles.

• Positional Strangles
• Intraday Strangles
• Position Sizing
• How to do Adjustments
• Plenty of Examples
• When to avoid
• Exit Criteria

How to sell Strangles in weekly expiry as explained by boss himself. @Mitesh_Engr

• When to sell
• How to do Adjustments
• Exit


Beautiful explanation on positional option selling by @Mitesh_Engr
Sir on how to sell low premium strangles yourself without paying anyone. This is a free mini course in


1st Live example of managing a strangle by Mitesh Sir. @Mitesh_Engr

• Sold Strangles 20% cap used
• Added 20% cap more when in profit
• Booked profitable leg and rolled up
• Kept rolling up profitable leg
• Booked loss in calls
• Sold only


2nd example by @Mitesh_Engr Sir on converting a directional trade into strangles. Option Sellers can use this for consistent profit.

• Identified a reversal and sold puts

• Puts decayed a lot

• When achieved 2% profit through puts then sold

You May Also Like