Nigeria’s bustling cities and growing real estate market have always attracted property investors looking for lucrative opportunities. However, the high entry point often reserved real estate for the ultra-wealthy, making it challenging for everyday investors to participate.
But what if you could own a piece of Nigeria’s real estate without breaking the bank? That’s exactly what fractional property investment offers!
So, what exactly is fractional property investment? What are the benefits? And is it worth it? In this blog, we explore fractional property investment in Nigeria and how getting just a slice of the action could be a promising and lucrative opportunity for you.
Fractional Property Investment in Brief
Traditionally, investing in Nigeria’s real estate meant significant upfront costs. This limited the pool of potential investors and concentrated property ownership among a select few. Fractional ownership allows investors to own portions of an asset, proportionate to the amount they have invested.
Let’s Simplify It for You…
Imagine a whole property as an entire pie. Fractional shares represent slices of that pie. That pie can be divided into a few slices (think quarters), several slices (think eighths), or even more depending on the amount you’re looking to invest.
Now, whether you purchase the whole pie or just a few slices – that pie would taste the same, right? Essentially, when investing in fractional shares, you’ll still receive the benefits of investing in a whole asset, only at a lower purchase price. This model applies to various asset classes, including stocks, cryptocurrencies, and real estate.
How Does Fractional Property Investment Work?
Let’s use our real estate investment platform, Rest Realty, as an example. After a property is listed and fully funded on the platform, Rest Realty creates a Special Purpose Vehicle (SPV) acting as a separate company for investors to become shareholders in it. Each SPV is then divided into one million shares, and investors are allocated shares proportionate to their investment. So, if a one-bedroom apartment in Lagos costs 100 million Naira, then each share of that property is worth 100 Naira. If an investor invests 2 million Naira, they own 20,000 shares or 2% of the property. Simple enough, right?
Fractional ownership has shattered the barriers traditionally associated with real estate investment.
Here’s how:
Shared Investment: Through real estate crowdfunding, you invest in a portion of a high-end property alongside other investors. This drastically lowers the initial investment minimum, making Nigeria’s prime real estate accessible to a wider group of individuals.
Diversification is Key: By owning shares in multiple properties across Nigeria’s booming property market, you avoid putting all your eggs in one basket. Fractional ownership allows you to spread your investment across various properties, minimizing risk and maximizing potential returns.
Hassle-Free Management: Unlike traditional ownership, fractional ownership lets you reap the benefits without the burden of property management. Real estate crowdfunding platforms, like Rest Realty, handle all the admin work and property management for you.
Is Fractional Ownership Better?
In short, it can be. And it’s for a few key reasons:
Targeted Returns: When sourced by real estate companies like Rest Realty, fractional ownership often focuses on properties with high rental yields and strong return potential. This translates to a steady stream of income for you.
Liquidity Like Never Before: Nigeria’s fractional ownership market is becoming increasingly flexible. Many real estate crowdfunding platforms allow you to easily buy and sell your shares through share transfer windows, providing greater flexibility compared to traditional property investments.
Invest Like a Pro: New to Nigeria’s real estate scene? Fractional ownership allows you to invest with regulated platforms that understand the market, helping you navigate investment decisions and maximize returns.
Is Fractional Ownership Right for You?
Despite its many benefits, fractional ownership isn’t a one-size-fits-all solution. Consider the following:
Investment Goals: How much are you willing to invest? Are you seeking steady rental income, capital appreciation, or both?
Risk Tolerance: While diversification mitigates risk, fractional ownership still involves the typical real estate risks associated with investing in Nigeria.
Exit Strategy: Are you willing to hold for 5 years? Understand your investment timeframe and choose a platform with clear exit options.
The Future is Fractional
Hassle-free and accessible, fractional ownership is undeniably democratizing Nigeria’s real estate market. Are you ready to unlock your share of Nigeria’s property sector through fractional property investment?
With Rest Realty, it has never been easier to invest in Nigeria. You can get started today with our real estate crowdfunding platform. Gain exposure to Nigeria’s real estate market and diversify your portfolio with ease!
Disclaimer: This blog is intended solely for educational purposes and should not be treated as financial advice. We recommend conducting thorough research, performing due diligence, and consulting with financial advisors to assess any real estate investment against your financial goals.