Stats indicate that there are 19.95 million rental properties in the U.S., and [63%](https://www.financialsamurai.com/what-percentage-of-americans-own-stocks-or-real-estate/#:~:text=According to the latest Gallup,of about 69% in 2004.) of Americans own real estate, making it one of the most popular investments available.
Fractional investing in real estate is when many different investors split the cost of buying a property. This type of investment has gained traction as it allows average investors to get involved with real estate investments that they might not have been able to access otherwise due to the high cost of entry.
This article will explore the best real estate fractional investing platforms to help you find one that suits your budget and needs.
What is Fractional Investing in Real Estate?
Fractional investing in real estate is when a group of investors collaborates to buy and manage investment properties. The cost of buying the property is split between all the investors, making it more accessible to individuals who might not have been able to purchase an entire property independently.
Fractional investing makes it easier to manage the property since there are multiple owners. Each investor can contribute their skills and resources to the property.
Fraction Real Estate Investing: Top Pros and Cons
Like any other type of investment, there are pros and cons to fractional real estate investing. The following are some of the key advantages and drawbacks:
Pros of Fraction Real Estate Investing
The following are some of the key benefits of fractional real estate investing:
- Low Entry Cost – Since the cost of buying a property is split among multiple investors, it’s easier for individuals to become involved in real estate investments
- Low Maintenance – By pooling resources, fractional investors can manage properties more efficiently and effectively.
- Passive income - Investors can gain passive income from rental income, appreciation, and tax benefits.
- Lower risk - Fractional investing allows investors to spread their risk across multiple properties, which helps mitigate potential losses.
- Steadier income stream - By diversifying their investments, investors can steady their income stream.
Cons of Fraction Real Estate Investing
The following are some drawbacks of fractional real estate investing:
- Limited control - Since the property is shared among the investors, each investor only has limited control over decision-making.
- Potential unknown co-owners - It’s possible that investors may not know who they are in business with when investing in real estate fractions. This can lead to problems if the co-owner has different goals or is unreliable.
- Complexity - Fractional real estate investments can be complex, and some investors may not have the appropriate knowledge or experience to handle them.
- Difficulty selling your share - It can be more difficult for investors to sell their share than an entire property.
5 Best Real Estate Fractional Investing Platforms
Some of the best fractional real estate investment platforms include
Getaway is a real estate fractional investing platform that allows investors to purchase real estate fractions from as little as $100. The platform is designed to make investing in real estate fractions easier for new investors with its user-friendly interface and detailed analytics.
Getaway makes it easy for people to rent luxury real estate and to invest in it too. They have raised a total of $4.4 million in investment to launch a unique take on fractional investment. Everything listed on their site is actually purchased by Getaway, ensuring a 5 star investment experience.
Yieldstreet is another fractional real estate investing platform that started operating in 2015. It is a platform for investment options like real estate, litigation finance, and marine finance. A team of experienced professionals backs the legitimate alternative investing platform.
The company's goal is to make alternative investments accessible to a wider range of investors, allowing them to participate in high-return investments and diversify their portfolios. Yieldstreet investment options include Yieldstreet Prism Fund, Art Equity Fund IV, SFR Diversified Fund I, Enhanced Crypto Fund, Growth & Income REIT, Specialty Finance Fund II, and StepStone Venture Capital Fund I.
HoneyBricks is a specialist real estate investment platform that provides fractional investing opportunities in real estate projects. With relatively low minimums and no hidden fees, the platform is perfect for accredited investors who value transparency, seek to leverage the advantages of cryptocurrency, and appreciate the flexibility to buy and sell their investments.
A few pros of HoneyBricks are that it offers quick account creation, allows users to partner with leading real estate operators, and provides access to exclusive opportunities unavailable on the open market.
Lofty.ai is a fractional real estate investing platform that provides investors access to exclusive, high-growth assets. The new-age crypto-based real estate marketplace aims to democratize investing in real estate by offering fractional ownership.
The primary pros of using Lofty.ai are that it allows users to earn passive income through micropayments, accepts credit cards, and enables investors to diversify their portfolios. A few drawbacks are that the platform doesn't offer a mobile application and Lofty tokens have no value outside the platform.
Fundrise is an online real estate investing platform that enables non-wealthy investors to purchase private commercial and residential properties by pooling their assets. With Fundrise, investors can buy a fraction of a property and share in the income generated from it.
The primary products the platform offers include real estate investment trusts or REITs. The pros of using Fundrise are that it finds, buys, and manages real estate investments for its users, offers low minimums to begin investing, and automatically invests your balance into different funds according to your goals. A few drawbacks are that it charges an annual fee of 1% and doesn't offer discounted rates for higher balances.
Is fractional ownership a good investment? It is. Fractional investing provides the unique advantages of low liquidity risk, access to a wide range of properties, and diversification. There are quite a few fractional real estate investing platforms available.
- Getaway is an excellent platform for fractional investing in real estate due to its low volatility, while Yieldstreet is a platform for alternative investments like real estate, litigation finance, and marine finance.
- HoneyBricks works great for experienced and accredited investors who want to leverage cryptocurrency, while Lofty.ai is perfect for those looking to diversify their portfolios and earn passive income through micropayments.
- Fundrise is ideal for those wanting to invest in private commercial and residential properties with low minimums and an automated investment system.
For more information on the best real estate fractional investing platforms or to get started with fractional investing, contact Getaway today.