Re: The Property / Real Estate Thread Quote:
Originally Posted by Abbas Hello Guys,
Has anyone invested in fractional commercial real estate by Strata or any other start-ups?
I searched the thread but did nto get any recent reviews. Can anyone share their experieces with such investment.
The risk ofcourse is that it seems that it is not regulated. And you are just getting a peice of paper instead of physical property.
However, the rental yeild seems to be good. Can someone please shed some light on this? |
I have invested and have some feedback. Firstly Strata is one of the better ones while there are many in this space. One of the challenges I see is that as a fractional owner, unless you own a significant share you are just too small a owner to influence any decision. So all decisions will be taken by the major shareholders and you will just have to move along. This is true even for listed companies but listed companies are regulated - here it's harder to know what is happening at the back.
If things go into a legal issue, there is no forum where you can unite with other owners to fight the problem. Well, you would know who the other owners are, but if all of them are geographically distributed it's hard to come together for a cause.
Coming to returns, please take into consideration there are 2 parts to the returns - the rental yield which will be taxed at your slab rates and the asset that gets capital appreciation. The capital appreciation will be subject to capital gains when you sell the asset. So the returns may be lesser that what they show at the outset.
However, I invested knowing all this as a diversification strategy. My only advice would be to go into this only for diversification and not the yield. Also, limit your capital you put into this to something you can afford to ignore if things go awry. It's very unlikely, but if debt funds can go awry, then this is much more likely than the debt funds. |