

Before you jump into selecting the right fractional investment opportunity, you must know what it is! In the simplest terms, fractional property is an approach where multiple investors pull resources to own a property.
Traditionally, only one single buyer acquires the full ownership of a property. However, according to BNM, 76% of households do not earn enough salary to afford a home priced at RM300,000 or above.
Hence, modern property investment methods are becoming rapidly popular in Malaysia, such as fractional investment, where the property is split into fractions and is owned by multiple owners. In return, you can access a market with low capital and low risk democratising a category of investment which only recently was the exclusive domain of wealthy people or institutional investors.

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1. Know Fractional Ownership Structure
Generally, fractional property investment is structured through a legal entity such as a Limited Liability Company (LLC) or a partnership. Each investor owns a share of this entity, collectively owning the entire property.
It not only lets you share the cost, but you have an equal share of ownership, responsibilities and benefits emerging from the property. The structure will give you a clear understanding of each owner’s rights and responsibilities.

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2. Research the Developer
When considering a fractional property, make sure to do your background research on the developer. Settle on a developer who has a good reputation in the market and a relevant track record of successful projects.
Also, examine the developer’s relationships with their other clients and whether they have faced any legal issues or disputes with previous investors. Vetting ahead of investment can save you from a hot mess afterwards.

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3. Check the Location
Location! Location! Location! No matter the type of property investment, this is a motto you should never forget. Look for a property in a developing or established location which has high demand. Such locations hold the prospect of higher appreciating value over time.
Other than that, check out if the location offers easy accessibility, nearby public transport and essential amenities such as hospitals, shopping malls, schools, banks, grocery stores, etc. The more convenient the location for living, the more valuable your property will be.

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4. Consider the Type of Property
The market now offers a range of property types for fractional property investment. From residential condominiums to commercial and industrial properties, you have multiple options. However, select a property type that aligns with your needs, risk appetite and investment goals.

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5. Be Familiar With Laws and Regulations
Fractional property investment is fairly new in Malaysia. Hence, you must invest some time to know the local real estate laws, securities regulations and taxation framework of such investment. Having clarity on the laws and regulations will enable you to draw up clear legal agreements.
You would be fully informed with a complete understanding of the legal matters and aspects like the distribution of rental returns, property management, selling shares and resolving disputes among shared investors.

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6. Take Account of Your Costs and Benefits
Although fractional property investment requires significantly less capital than traditional property purchases, it’s important to understand the costs involved and assess their feasibility for you. Firstly, you will have an initial investment to buy a fraction of the property. Then you will have recurring costs such as maintenance fees, management fees and tax that will be shared with your co-investors.
Compare these costs with your expected return on investment (ROI). Some fractional ownership offers financing options, in which case you will also have to consider the interest rate and repayment schedule. Ensure that the benefits outweigh the costs before finalising the agreement.

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7. Understand the Risks
Like any other investment, fractional property investment has its risks. Sure, it has low capital commitment, and real estate is comparatively much more stable than other industries. But you should still understand that property value is susceptible to economic downturns and cyclic fluctuations. You might also encounter low liquidity issues, as selling property shares can take time.
Lastly, you own property with other investors. So, if an investor defaults on payment or has a disagreement over property management, resolving that won’t be easy. So, it is important to know your co-investors before jumping into the pool with them.

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8. Have a Clear Exit Strategy
To maximise your returns on fractional property investment, you must have a solid exit strategy. There are various options available to make an exit. You can sell your shares to your fellow co-investor or the management company, or you can set a predetermined time to exit. Whatever the case, choose an exit strategy that suits your flexibility.

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9. Select a Managed Fractional Ownership Platform
Lastly, the best way to start fractional property ownership is to opt for a managed platform that has the expertise and knowledge to guide you through the process. It will simplify your investment enormously!
You can enjoy exploring which property gives you the highest return while the platform handles all the nitty gritty such as daily asset management, including maintenance, bookings, rental income, and even resolving any dispute issues with co-investors.
This approach provides a simpler way to earn passively and diversify your investment portfolio, maximising your wealth with minimal risk. If you are looking for where to start, check out our platform, The Rainmakers.

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Ready to Start Your Fractional Property Investment Journey?

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Visit The Rainmakers today and discover how you can make smart, low-risk fractional property investments. We help you make informed decisions, ensuring your investment journey is simple, secure and sustainable with rewarding outcomes.