stock.estate & fractional ownership

When I was a kid I loved monopoly. I loved to accumulate properties that generated passive income each time another player was stopping by my square.

Growing up I started to play monopoly in real life. I’ve built my portfolio diversifying between residential, commercial and vacation properties across various countries and locations.

The only problem is that it takes a ton of capital to do that. So recently I started to buy properties with my friends committing smaller amounts and owning fractions of the whole thing.

So if I am already doing it with my friends and it is working, why do I not share it with my broader community and stock.estate users?!

Eureka moment: stock.estate is fractional ownership too.

The advantage: I do not need to have 200-300k and buy the entire asset, but any time I have spare 10k I can buy together with my friends a real estate asset that is going to generate rental income and capital gain. The investment risk is diversified across different types of properties so the return is going to be stable even in adverse market conditions.

Fractional Ownership Concept

The real estate industry has been historically characterized by a large number of intermediaries, material information asymmetry and high barriers to entry. This less-than-ideal configuration, which has essentially been unchanged for decades, creates frictions and frustrations for buyers, sellers and renters.

Given the economic importance and the gigantic size of the real estate sector, it is no surprise that a multitude of start-ups have been working tirelessly to transform the various verticals of the real estate value chain. Between them there is stock.estate who propose the fractional ownership model adapted to the Romanian real estate market.

Fractional ownership refers to buying fractions of a real estate. This type of investment offers several benefits over traditional ownership. As an alternative, investment in fractional ownership of residential real estate, commercial properties or vacation properties can be an innovative and attractive way to access the same investment benefits as direct property ownership without the associated frictions.

While the principle of fractional ownership seems rather simple — you own an interest in a property alongside other unrelated investors — its actual implementation can take many different shapes and forms. After comparing several alternative real estate investment models, we can share some observations on this fast-growing space.

First, the profile and quality of the investable real estate hugely makes the difference, it is the game changer in this type of activity. For wealth accumulation and preservation, we firmly believe in the old mantra “location, location, location” and we prefer to promote prime properties in city centers or well-known vacation locations.

Second, there is a wide spectrum of fractional investment strategies. At one end, there is the marketplace that only offers listings of commercial properties tokenized, for example. At the other end, you'll find full-service investment platforms that have experienced teams curating quality assets and co-investing in the properties alongside investors to ensure the alignment of interest. We position stock.estate in this second category, providing an end-to-end service.

Finally, the real estate investment experience of the team behind each platform is a critical aspect for assessing their ability to provide attractive opportunities. Based on our experience in this industry, only on-the-ground networks and relationships can provide access to the best deals on the market.

Who Can Be A Co-investor In Fractional Ownership Properties?

Everyone.

The Pros

• Diversification – If you want to invest in real estate without putting too much money down, fractional ownership in fractional properties might be just what you're looking for. This model applies even to expensive assets. By investing in multiple properties, you'll spread your risk across several investments. This way, even if one investment fails, you won't lose everything.
• Flexibility – With fractional ownership, you don't have to commit to owning a certain amount of a property. Instead, you can buy a percentage of a property. For example, you could purchase 10% of a residential building and start earning rental income from the beginning. In this way you'd still own part of a property, but you wouldn't have to pay for the entire thing upfront.
• Investment Options – When you invest in fractional ownership, you can choose from different types of properties. Some options include single family homes, condos, townhomes, commercial buildings, and vacant land. Each type of property offers a unique set of benefits and drawbacks.