Fractional Land Ownership : How Investors Can Buy Shares in High Value Land Parcels

Investing in land through fractional ownership share is a great way to co-own land and to get greater insights into wonderful world of land investing.

The legal framework for Fractional ownership is exactly like buying shares in any company. In this case, one becomes a shareholder in a company which owns the land. When we buy shares in any company, we need to study the business model of the company, the management of the company, likely prospects and future projections, etc. Exactly in the same manner, one needs to study about the land asset of the company, about the management of the company and people behind it and plans for building value and plan for exit, etc.  Let us talk about each of these aspects one by one.

In the opinion of the expert investors, for any successful venture both the business model and the management need to be strong and only then the shareholders in that venture can derive value. Absence of even one of these two main factors can lead to low returns or loss of capital, etc.

Lets first talk about the management. Investors should join only such ventures which are backed by managements which have the required experience and track record in Real Estate and more so those managements who have the track record of successfully managing group investments and who have been able to deliver value to their shareholders. Experienced teams having knowledge and skills and working with great deal of transparency and ethics can only deliver value to their shareholders.

Secondly, like business ideas, not all lands selected for investments will deliver above average returns. Location, further prospects in the region, development plans for the land, pricing and host of other factors should be studied and researched well before participating in any such land investment. Generally, lands which are soon getting into development can deliver better than average returns and are easy to study also. In such cases, one needs to study the raw land prices, costs of approvals and developments and present prices of finished and developed product so as to understand the feasibility of the land-based project.

Another important thing which investors should keep in mind is that ease of investing and possibility of investing even small sums of amounts through the fractional ownership route will encourage many first-time companies or fly by night operators to float such land investment schemes which may not be fundamentally sound. Investors should do their own due diligence about the management and about the land and its further potential before committing any amount for such fractional land ownership. 

All in all, investing in land through fractional ownership model can be a great way for investors to spread their investments and earn and learn all about different models of land investing.