Introduction

Real estate investing has traditionally been reserved for those with significant capital to invest. However, with the advent of fractional investing, that is no longer the case. This new approach to investing allows individuals to own a portion of a property without having to purchase the entire property outright. In this blog post, we will discuss what fractional investing in real estate is, how it works, and its advantages and disadvantages for both investors and asset holders.

What is Fractional Investing in Real Estate?

Fractional investing in real estate refers to the process of splitting ownership of a property among multiple investors. Investors can own a portion of a property, and in turn, they will receive a proportional share of any income generated by the property, as well as any appreciation in the property's value. Fractional ownership can apply to a wide variety of real estate investments, including residential and commercial properties, as well as land.

How Does Fractional Investing Work?

In fractional real estate investing, a property is divided into smaller units or shares. Each share represents a percentage of the property's ownership, and investors can purchase one or more shares to become partial owners of the property. This is typically facilitated by a third-party platform or real estate investment company that handles the legal and administrative aspects of the investment.

One of the key benefits for investors is that it allows for the diversification of their portfolio by making it possible to invest small amounts in multiple properties rather than having to invest significant amounts of money into a single property. Investors can spread their investment across multiple properties or even different asset classes, reducing their risk exposure.

The benefits aren’t exclusive to investors. The relationship between asset holders and investors is symbiotic, and by enabling a larger pool of investors, asset holders unlock the potential to generate much more capital.

For Real Estate Asset Holders: Advantages of Using a Fractional Investing Platform to Raise Capital

• Open up access to a broader market pool of investors :
  • Expand your network of investors beyond HNW (high net worth) individuals to a much wider population pool of retail investors; stand out in the investor market with a public portfolio that has wider reach, accessibility and breadth of visibility.
• A fantastic market opportunity:
  • The global real estate investment market was valued at just over $1 trillion in 2021, and is projected to reach approximately $30 trillion by 2031, growing at a CAGR of 10.7% from 2022 to 2031.
• Increase cash flow on your existing, appreciating assets:
  • Offset your operational costs on your assets with inbound cash flow taken from your pool of fractional investors
• Raise capital to acquire more real estate assets:
  • By raising capital from your existing assets, your firm can re-deploy that invested capital towards a new cohort of assets - all while the current assets continue to operate, yield dividends, and appreciate over time.
• Quickly start marketing, offering and creating value:
  • With a ready-made platform solution such as Scalio’s, firms like yours can start marketing your portfolio of assets under management within weeks. Within a few short months, receive investment capital from the investment platform. Using intuitive content management features, have your back office self-manage, engage, retain and monetize on your investors over years, increasing the LTV of your assets and investors over time.
• Built with trusted, proven digital 3rd party integrations:
  • Let the platform do the work, so you can focus on what you do best: Acquiring and operating your assets. From digital wallets and KYC-AML investor verification to digital contract signing and technical scalability - we use the digital FinTech market leaders across all of the functional ecosystems.
• Optimized investor experience:
  • Utilizing a proven platform maximizes the investment from each investor, removes friction in their digital investor verification, and encourages re-investment in future, sub-sequential offerings. Acquire new investors, while re-engaging your current investors.
• Significantly reduce marketing and CAC (customer acquisition costs):
  • Utilizing incentivized sharing features - such as those offered within Scalio’s Fractional Investment Platform - empowers your firm to offer small incentives to investors to refer to their friend network, which significantly reduces investor marketing & acquisition costs (as compared to paying for digital advertisement marketing).

For Investors: Advantages of Fractional Investing in Real Estate

• Diversification:
  • Empower investors to diversify their portfolios by investing in multiple properties, reducing their overall risk.
• Access to Higher-Quality Properties:
  • Provide access to higher-quality properties that may be out of reach for individual investors due to their high cost.
• Increased Liquidity:
  • Fractional investing can also increase liquidity for investors. Instead of being tied to a single property, investors can buy and sell shares in a property, making it easier to exit their investment if they need to.
• Passive Income:
  • Fractional investing provides investors with a passive income stream. As partial owners of a property, they will receive a proportional share of any rental income generated by the property.

Our Solution Creates Value for Real Estate Asset Holders on Day 1

Scalio offers a secure, CMS-controlled, out-of-the-box investment platform solution that offers intuitive cross-platform applications with best-in-class digital 3rd party financial and marketing integrations. We are one of the industry leaders in building technology for the facilitation of fractional investing through Regulation A, D, & CF investments. We've been at the forefront of the industry since the beginning, and our suite of technology is being used in multiple production applications across several industries.

From offering an intuitive investor experience to a back-office platform to manage content and track performance, our solution empowers firms with a pathway to raise capital. Core features and services include:

• Frictionless investor experience
• Out-of-the-box investor verification, purchasing and digital wallets
• Engagement, retention and sharing features to maximize investments
• Best-in-class 3rd party finance & technical integrations
• Low-cost setup & digital asset management
• Intuitive CMS-controlled admin experience

Conclusion

Fractional real estate investing is an innovative approach that offers a range of benefits for both investors and asset holders. It allows for the diversification of portfolios, access to higher-quality properties, increased liquidity, and passive income streams for investors. For asset holders, the advantages of using a fractional investing platform include access to a broader market pool of investors, increased cash flow on existing assets, and the ability to raise capital to acquire more real estate assets. Scalio offers the best solution on the market, providing a secure and intuitive investment platform with best-in-class digital 3rd party financial and marketing integrations. To learn more about our solution and how it can help you raise capital, please contact us or visit our FinTech site.