In this week’s episode of Ask Kevin Young, Kevin answers Peter’s question about fractional investing:
“Fractional property buying; what are the risks, is your capital secure and would Property Club get involved in this new way of investing?”
This ‘type’ of investing has become popular very recently by the media’s scarcity tactics about australian property being hard to invest into. Fractional investing, if you don’t know, is a like how it sounds, owning a fraction of the asset. This idea is best described through popular time-share investments like boats and planes but is now being used for investment property.
If you’re unaware and listen to the media too much, I’ll let you know that property within Australia is easier to get into than ever before.
My thoughts of fractional investing for the property market are that it’s fraught with danger.
Even though there is less risk, it comes with a lot more problems especially when you want to add value to the property by renovating or using the deed for the home to guarantee another property they want to purchase as everyone needs to sign off as a guarantor for you.
Would you want to sign off for another person who isn’t related to you? I didn’t think so either.
The far better or simpler alternative is to go to your relative that does have some assets, let them become a guarantor for you to own the property and within 12-18 months they can remove themselves from there.
If you need more information join the club or see your mentor today to get started. I’d also love to hear what your thoughts are on the topic, leave a comment below.
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