What is fractional real estate investment?
Fractional ownership in real estate is a term used to describe when several investors join to invest in a real estate asset so that all of them can benefit from a share of the income that the asset generates, and any appreciation in the value of the property.
Who can invest?
Any Individual / Company / Organization from Any Part of The World
What are the documents needed to sign up with RESE?
We require copies of the following documentation.
1. PAN Card
2. Address Proof (Aadhar/Driver's License/Passport).
3. A cancelled cheque leaf with the name printed.
4. Your 16-digit demat account number
Can I invest in more than one property and have a portfolio?
Yes. You can invest in as many properties as you like and build a diversified portfolio across various opportunities and locations.
How does a property get listed on RESE?
Before a property is listed on our platform, our team runs various financial models and data analytics to identify properties that can ideally maximize returns for our investors.
What if something goes wrong with RESE? Is my investment safe?
RESE is an online investment platform, and your ownership structure is designed in such a way that the ownership is not dependent on anyone. Your ownership, governance and compliance records are stored in public databases and in government records. Your investment remains secure.
Is fractional ownership risky?
Yes, as with any real estate transaction, owning a property through RESE carries inherent risks and potential loss of capital.
Should I engage with an attorney or lawyer?
All legal due diligence is taken care of by us on your behalf and there is no need to engage with an attorney or lawyer. If you do wish to engage a legal resource, we will be happy to answer any questions they may have.
How do you keep my personal information secure?
The security of our platform and privacy of all your data is our utmost priority. RESE’s platform is built keeping the best-in-class security and privacy features in mind.
What is the minimum investment?
Minimum Investment for any property is INR 10,000
What happens if a property fails to be fully funded?
If for some reason a property on our platform does not complete its funding target, any funds that have been committed by investors will be reimbursed to the registered bank account.
How are the investments structured?
Investments are structured as private limited companies. For each investment, a Specific Purpose Vehicle (SPV) is created in which funds are raised to own and manage the property. As an investor you will own shares of the SPV holding the property and represent your investment. RESE assumes responsibility for oversight, reporting, and major decisions on behalf of the investors.
What is an SPV?
Property investments are owned by a private limited company designated as a 'Specific Purpose Vehicle', or SPV. Any investments on a particular property will be owned by an SPV setup for this specific purpose.
What is the investment process?
Once your account is KYC verified, you can invest in any property listed on our platform wherein you will need to e-sign a binding Expression of Interest and transfer the initial token advance of your investment amount to your virtual account (which RESE will create for this purpose) to block your investment.
Once a property has been fully funded, you will be required to transfer the remaining amount into your virtual account. Your amount will then be transferred to the SPV account and the SPV will proceed to purchase the property.
The ownership and property management agreement will be shared with you and once you approve and execute it, the investment is finalized along with details of your shareholding in the SPV.
Will I need to travel to the location of the property or such?
No, you will not need to travel. All required documentation will be signed digitally via DocuSign.
What happens if I want to withdraw my initial token advance?
Once an initial investment or token advance is paid, it cannot be refunded as per the Expression of Interest which the investor has signed.
Only if the property’s funding is incomplete, RESE will reimburse an amount back to the investor's registered bank account.
What kind of documentation will I need to sign?
You will sign an Expression of Interest, Ownership Agreement, and a Property Management Agreement with RESE. All these documents will
only require a digital signature and no physical copies will have to be sent. This makes the process faster, transparent, and convenient.
What are RESE's fees?
We charge an annual property management fee of in the range of 0.5% - 1% and a performance fee of 10- 20% above a hurdle rate of 8% on capital appreciation at the time of sale of the asset. The annual property management and performance fee may differ based on the property listed.
The management fee is a monthly charge on gross rent and is designed to cover the management of the SPV and its assets whereas the profit share/performance fee is payable on exit. This has been designed to reward investors should the investment offered by us prove to be successful for the investor.
For e.g. If a property is bought for Rs. 1,00,000 and the investor makes Rs. 1,08,000 at the time of sale, we do not charge any performance fees.
If for the same property, the investor makes Rs. 1,15,000 we charge a 20% fee on Rs.7,000 (1,15,000 - 1,08,000) i.e., Rs. 1,400. This way our fees are aligned with investor returns.
How does RESE guarantee that all property titles are in the clear?
RESE has a very experienced team who perform thorough technical and legal due diligence before buying any property. We get all our title reports signed by a Tier-I law firm.
Are investors allowed to see rental agreement?
Yes. The Lease/Rental Agreement is shared with the investors.
What are the reporting standards and disclosures?
We believe in 100% transparency in reporting. All property documents, rental agreements, tenancy details, title report, due diligence report, etc. will be always available through our dashboard. Detailed monthly financials are also made available through the dashboard.
Do you offer any guarantee on returns?
No, RESE does not guarantee any returns. On the contrary, we advise potential investors to be wary of any scheme which provides guaranteed returns.
What are the risks associated with these investments?
There are various risks associated with your fractional investments such as liquidity, tenant, and market risk.
What sort of returns can I expect?
RESE does not guarantee any returns on the assets listed on our platform. However, our expected returns are 14-20% IRR over a period of 5 years.
Is there any lock-in on my investment?
Yes there is an initial 6 month lock-in from the time the property is funded. You are free to sell your holdings post that.
When is my investment process complete?
Your investment is completed as soon as the property is fully funded by other co-investors. RESE has a time frame of 60 days in which to ensure that the property receives complete funding.
When & how will I receive my returns?
Rental yield and interest on the security deposit are transferred to your bank account on or before the 10th day of each month.
Are there any tax deductions on rental returns?
Yes. RESE deducts a 10% TDS before remitting returns to you monthly.
How long do you hold these investments for?
Properties will have an investment lifespan of minimum 3-5 years to allow for the asset to appreciate. While an early exit is possible through our liquidity options, this could adversely affect the total return on your investment.
Investors can choose to sell investments (after an initial 6-month lock-in period) through RESE Resale Market.
How do I exit my investment?
Once the initial 6-month lock-in period is complete, you can exit your investment in four different ways.
• Asset Sale: Once an investment is 3 years old, RESE will hold an annual online poll among shareholders to decide if the asset is to be liquidated or held. If at least 75% of the shareholders vote to sell, we will begin the process of liquidation. Once the asset is sold, you will be credited your gains (post any taxes and fees) on your registered bank account. If shareholders vote to hold, the investment will continue as is, until the next annual poll where the process will be repeated.
• Private Sale: You are free to sell your fraction/holding to anyone you may know, such as friends or family. You only need to inform us so that we can update our records and help you with the share transfer. While RESE provides an NAV (Net Asset Value), you can choose to sell at any price you wish.
• Resale Market: Using RESE online dashboard, you can list your fraction/holding on RESE resale market at RESE's recommended NAV. Once a new investor has acquired your fraction, you will be credited your gains (post any taxes and fees) on your registered bank account.
• Dedicated Resale Window: RESE will open an annual resale window during which investors can put up their fraction/holding for sale at a discount. During this period no new investments are offered on our platform and hence focus is solely on the resale platform. Once a new investor has acquired your fraction, you will be credited your gains (post any taxes and fees) on your registered bank account.
Who takes care of tenancy and management?
RESE takes care of all aspects regarding the asset.
When I invest in deals on RESE, what do I own?
You will own Equity Shares and Debentures of the SPV which owns the property. These will be in demat form.
What are the tax implications on my investments?
As per the current income tax regulations, your returns will be taxed in the same manner as if you had purchased the property on your own.
You will be paying two kinds of taxes:
• Rents: Rents received from the property are distributed as interest on debentures which are taxable directly in the hands of the investors (post 10% withholding tax which can be claimed by the investor at the end of the year).
• Capital Gains: The profit on sale of commercial property is considered as capital gains. The same shall be long-term, if the property was held for more than 24 months and will be taxed at 20%, irrespective of the quantum of gains. However, if the property were to be sold before 24 months have passed, the same becomes taxable as short-term capital gains and is taxed as normal income. Please consult your financial advisor for more details.
How will I be updated on the progress of my investments?
You can view the performance of your investment through our online dashboard. Please note that the Net Asset Value (NAV) of the property will be updated on a half yearly basis.
Will there be a management fee when the property is not tenanted?
No, there will be no management fee charged to investors for as long as the property is not tenanted.
What does the management fee paid to RESE cover?
The Management fee covers the costs for collection of rents, payouts to investors, TDS filing, GST filing, facilitating property tax payments, compliances of the SPV, sending monthly MIS of the SPV and insurance.
What is the contingency reserve used for?
Any unforeseen expenses that arise in the property are met using the contingency reserve. If the reserves are not used, they are refunded back to the investors at the time of sale.
How is RESE different from a REIT/Real Estate Fund?
In a REIT or a Real Estate fund, the investor does not have exposure to directly owning a real estate property. The investor invests in a fund that has fund managers who decide how the capital is deployed and managed.
On the other hand, RESE is a platform that connects you directly with investment opportunities in commercial real estate, allowing you to invest and own fractional ownership in properties of your choice and reap its yield and capital appreciation over time.
Why is fractional investing a better way to invest than traditional real estate models?
A fractional-investing platform gives its investors direct access to a range of real estate investments across the country, whereas in a traditional real estate model, the high capital requirement limits one's investment appetite and creates a large concentration of risk.