What is Fractional Real Estate Investing?

Fractional ownership is a growing trend in real estate investing. It involves people pooling their resources to purchase a home, and has become more and more popular in this ultra-competitive market we are in.

 

Arrived Homes was recently founded as a way to purchase shares in rental homes where co-owners can earn income, and is backed by Jeff Bezos (founder of Amazon.com). The website features opportunities for just $100, and saw demand 100 times more than expected, causing the site to crash for a few hours during launch. Arrived Homes brokers the sale of shares of homes in which you can co-own part of the real estate. They also offer property management services which includes things such as finding tenants, maintaining the property, and overseeing the dividend payments.

 

 

Pacaso is another such company which offers high-end vacation rentals. But, keep in mind, this is not a new concept. Vacation home sharing began in the late 1980s, but has evolved thanks to the internet and to regulatory changes in 2008. The concept is like a time share, but only involves a single home, and typically allows owners to stay in the home for a week or two each year.

 

Companies such as Arrived, Pacaso, Groundfloor, Ember, and Fundrise allow you to become a business partner in the purchase of a home by purchasing a portion/fraction as a part-time owner. Dividends are earned through price appreciation and rental income, and can be as much as 10% a year.