If you are an investor looking to expand your portfolio beyond SIPs, Mutual Funds, and Gold, then Fractional Real Estate offers a powerful and flexible way to add property assets. You come across a piece of land in a growing area of outer Bangalore. This costs ₹10 crores. Perhaps you can’t buy that alone. Too high, too risky. 

Now, what if 100 people came together and pooled ₹10 lakh each? The rental yield on that property now comes to you, proportional to your investment. I.e., if you invested a 10th of the value, you would enjoy a 10th of the rental return. 

How does Fractional Real Estate work? 

In practice, investors will buy fractions of a listed property, just like shares in a company. Rent collected from the tenant is distributed to the investors as regular income. You will also gain from capital appreciation when the property is sold. 

This is usually facilitated by a Fractional RE platform, just like PropFTX

Are Fractional Real Estate Investments Safe? 

Verified platforms operate under Indian company law and SEBI guidelines, which enforce transparency and protect investor interests.

The properties you invest in are held by a Special Purpose Vehicle (SPV), which is essentially a private limited company, solely so investors can put their money into one particular property.

This way, you’re getting shares on your investment, not just a promise and a confirmation screen. If you invest ₹10 lakhs in a ₹10 crore property, you hold 1% in the SPV. 

If the property is sold, the SPV receives the sales proceeds and distributes them according to shareholding. Check whether your platform provides audited financials of the SPV; this is a key trust factor.

At PropFTX, we add a layer of security for our investors via ESCROW and Blockchain.  

Escrow: funds are held safely until the deal is executed.

Blockchain: every transaction is recorded permanently, reducing the scope for disputes.

Exiting Your Fractional Real Estate Investment: When and How

Yes, while you can exit or sell your investment with digital ease, the process is rarely instantaneous. Most property deals have a lock-in period. At PropFTX, this averages at 120 – 150 days. 

After the lock-in, you can sell shares in the SPV to another investor, subject to finding a buyer. An active platform will always see investors buying/selling/trading properties to grow their own portfolio. 

The cleanest property exit happens when the property itself is sold. Everyone receives a share of the sales proceeds. Since you own shares in the SPV, any sale of the property is treated like a corporate decision. Such a sale only happens when a majority of shareholders (typically 51%–75%) approve.

Can you then exit your Fractional Real Estate investment? Yes, you can. But timing matters. Think of Fractional RE as a medium or long-term investment and not quick flipping. 

Can I build a passive income with Fractional Real Estate? 

Yes, which is the main reason smart investors opt for fractional investing. Here’s how fractional real estate generates passive income for investors:

Unlike when you rent to an individual, fractional RE usually involves long-term corporate leases, think banks, firms, etc. This makes the income steadier and linear in growth. You essentially become a co-landlord. 

Over time, diversify your portfolio across multiple assets – offices, warehouses, retail, etc. The more fractions you hold, the more consistent your income stream. 

You can expect an average 7-10% rental yield in India, plus capital gains when the property is sold. 

What Are the Risks of Fractional Real Estate Investments?

Like any investment, fractional RE is not risk-free. Luckily, a lot of the risks are mitigated via your investment platform; just ensure you choose a trusted source. 

If a tenant vacates or defaults, your rental income pauses until a new tenant is secured. Corporate leases reduce this risk. And, as mentioned above, resale of your tokens depends on finding a buyer or waiting for a property sale. Poor governance of the SPV can affect reporting and decision-making regarding property. This is where platform vetting and compliance checks matter. 

Property values may rise and fall with economic conditions, infrastructure development, and demand in the area. At PropFTX, we combine decades of real estate intel and AI to handpick properties with the highest rates of growth.

As a general rule of thumb, don’t put all your eggs in one basket. Diversify across multiple assets and balance out your risks and returns.  

How to Get Started with Fractional Real Estate and Ask Questions

At PropFTX, you can get started with Fractional RE investing in three steps, through our app or website.

Before you start, feel free to connect with an expert. Transparency and basic understanding of your preferred platform are a must before you start investing. With 40 years of real estate experience, we are confident we can enlighten you. 

We’d love to hear from you. Feel free to shoot your questions over call or mail.