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Fractional ownership vs REIT: Which is a Better investment option?

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Fractional ownership vs REIT: Which is a Better investment option?

Investing in real estate has always been considered a lucrative option for individuals looking to grow their wealth. According to Mordor intelligence, with a CAGR of 21.10%, the size of the India commercial real estate market is projected to be USD 40.71 billion in 2024 and USD 106.05 billion by 2029.

But traditionally, Commercial real estate investing calls for a substantial amount of money as well as a lot of managerial responsibilities. 

But now that Real Estate Investment Trusts (REITs) and fractional ownership have become popular, investors have more affordable ways to invest in commercial real estate India.

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Overview of Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts, or REITs for short, are investment vehicles that pool the capital of several investors to make profitable real estate investments, particularly in commercial real estate (CRE).

The greatest option for individuals who would rather have an alternative to investing in real estate without owning a property is a REIT, which is similar to mutual funds. The entire return on investment (ROI) is derived from the rental income of the properties that are purchased and leased to businesses. The returns can range from 8% to 10% on average.

Benefits of REITs

Some advantages of investing in REITs include:

  • Ease of entry and diversification: REITs allow retail investors to participate in real estate investments without the need for significant capital, providing them access to a diversified portfolio of properties across different sectors.
  • Professional management and expertise: REITs are managed by experienced professionals who handle property acquisition, management, and other operational aspects, relieving investors from the burden of day-to-day responsibilities.
  • Potential for regular income through dividends: REITs are legally mandated to distribute a significant portion of their taxable income to shareholders in the form of dividends, providing potential steady income to investors.

Considerations when investing in REITs

There are certain risks and considerations when investing in REITs, including:

  • Market volatility and fluctuating returns: Like other investment vehicles, the value of REITs can be subject to market fluctuations, making returns potentially volatile.
  • Lack of control over investment decisions: Investors have limited influence over specific property decisions made by the REIT management.
  • Liquidity risk: The liquidity of REITs can vary depending on market conditions and investor demand. Selling REIT shares may not always be as easy or expedient as selling other forms of investments.
  • Dependency on overall real estate market conditions: The performance of REITs can be influenced by the overall real estate market. Economic downturns or changes in industry trends can impact REIT returns.

 Overview of Fractional Ownership Real Estate

The dynamic concept of fractional ownership allows several investors to collectively own a portion of a valuable asset, usually a commercial space or a high-end Grade A property. 

Its ability to democratise property investment by enabling investors to own a portion of commercial real estate assets, that was previously available to only HNIs, without bearing the entire financial burden is what makes it unique. This trend, which is already a worldwide success story, is picking up steam in India and has a lot of potential for people wishing to get into the commercial real estate industry.

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Reports suggest that the fractional ownership market in India jumped from Rs 1,500 crore in 2019 to Rs 4,000 crore in 2023.

Source: TruBoard Partners

Alternative investment platforms, for example, Assetmonk, offers a fractional ownership model where investments are secured and starts as low as 25 lakhs.

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Benefits of Fractional ownership

Lower Entry Barriers:  One of fractional ownership’s key benefits is that it lowers entry barriers. Commercial real estate, earlier, was accessible to only !% of the population due to its high upfront investment costs. A wider range of retail investors can access the real estate market thanks to fractional ownership, which allows investors to enter with a smaller financial commitment.

  • Access to prime commercial properties: Fractional ownership real estate allows you to access prime commercial properties that would otherwise be out of reach for individual investors. Now, You can own a share of high-value assets that were earlier inaccessible, and enjoy the rental income and capital appreciation from them. 
  • Diversification: Fractional ownership real estate enables you to diversify your investment portfolio by holding shares in different types and locations of properties and allowing you to diversify your risk across multiple assets and markets, and increase potential for consistent returns.
  • Reduced exposure to risk: Fractional ownership real estate reduces your exposure to risk as any potential losses or maintenance costs are shared among the co-owners  without the hassle of managing the property, as the fractional ownership platform takes care of it for you.

Fractional ownership vs REIT: Which is Better?

Here is a comparison table highlighting some key factors when considering fractional ownership and REIT investments:

Fractional OwnershipREIT
Initial InvestmentLower threshold, can invest in high-value properties with a smaller capital amountVaries, depends on the price per share
DiversificationCan diversify investments across different propertiesOffers exposure to a diversified portfolio of properties
ControlMore control over property decisionsLimited control, decisions made by professional management
LiquidityLess liquid, selling shares may require finding buyers or waiting for predetermined exit periodHighly liquid due to shares traded on stock exchanges
Potential ReturnsOffers potential for higher returns if property appreciates or generates substantial rental incomeSteady income potential through dividends, value of shares subject to market fluctuations
ManagementInvestors may have a say in property management decisionsProfessional management handles property acquisition, leasing, and management
Tax ImplicationsDepends on jurisdiction, may have tax benefits or consequencesDividends may be taxable, potential tax consequences on REIT liquidation or sale
AccessibilityMay have eligibility requirements or accreditation criteriaGenerally accessible to a broader range of investors

Finally, The choice between fractional ownership and REITs as investment options ultimately depends on individual preferences, financial goals, and risk tolerance.

It’s important to conduct thorough research and seek professional advice to align your investment choices with your financial goals and risk tolerance.

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Assetmonk: Your Entryway to Fractional Ownership Real estate

Assetmonk is the fastest-growing alternative investment platform in India. It focuses on well-structured, premium deals with exceptional returns, backed by one of the most lucrative asset classes—real estate—that was previously exclusive to the top 1% of the population.

Fractional ownership allows non-HNIs to access and invest in high-value real estate assets, which they may not have been able to do otherwise and also diversifies your investment portfolios.

Starting at just 25 lakhs, Assetmonk provides a fractional ownership model with secured investments. With Assetmonk’s “The Landing” offering, you can now invest in India’s first-ever co-living project at GMR Hyderabad International Airport.

Bottom Line

Fractional ownership offers the opportunity to invest in high-value properties with a lower initial investment, providing potential for higher returns and more control over property decisions. On the other hand, REITs offer exposure to a diversified portfolio of properties, professional management, and high liquidity.

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 It is crucial to carefully evaluate the advantages and disadvantages of both options, considering factors such as investment requirements, potential returns, control, liquidity, and tax implications. By aligning your investment choices with your specific goals and risk tolerance, you can make an informed decision that best suits your individual circumstances.

Assetmonk, an alternate investment platform, is an excellent option if you’re looking for a way to earn passive income while diversifying your portfolio. The fractional ownership options offered by Assetmonk provide long-term retail investors wishing to increase their exposure to the CRE market with a high potential earning yield of 14 to 21% annually. Start investing today!

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Ontario Sunshine List 2024 Reveals Why People Can’t Afford To Buy A Home

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Ontario’s Sunshine List Reveals Why People Can’t Afford To Buy A Home

Ontario Sunshine List is released every year and it reveals the salaries of public sector workers who take home a salary in excess of $100,000. This year the list features 300,570 names which is 30,000 higher than last year of public sector employees with salaries over $100,000. The Ontario Sunshine list also features five employees working at the Ontario Power Generation who are among the top 10 earners with the province’s highest salary nearing $2 million.

Ontario had passed the Public Sector Salary Disclosure Act in 1996 under the Mike Harris government and the stated aim of the act was to make the government more transparent and accountable. The $100,000 limit was a big deal then.

However the $100,000 in 1996 in relative terms in 2024 will be equivalent to $180,564.97. If you remove 300,570 people on this year’s Ontario Sunshine List for that salary threshold there you drop 279,781 names. In other words there will be many people who will not be able to own a house without help from family or an inheritance.

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In a nutshell it means that employees who take home a six figure salary package will still feel the pinch of Canada’s affordability crisis. The soaring inflation and rising cost of living a $100,000 salary doesn’t guarantee financial security in many parts of the country.

Also, to maintain the $100,000 threshold today, the province should have adjusted it to $55,381.73 in 1996. Ontario has fixed a threshold of $100,000, while the threshold varies in other provinces. Alberta, for example, has set a threshold of $125,888 for government employees and $150,219 for people in public sector bodies.

Not much information is available for the federal government, but a Canadian Taxpayers Federation access-to-information request revealed that 110,593 employees in the federal public service earned $100,000 or more in 2023.

There are a couple of options for Ontario and other governments with non-indexing disclosure requirements. Resetting the threshold to a number that makes more sense today and then continuing to index the threshold going forward seems feasible.

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We also don’t need to reveal the names of all individuals. The government could report aggregated salary ranges by job title rather than disclosing specific names below a second, lower threshold. This would maintain government accountability and transparency by still disclosing who the highest earners are.

As it stands, we have a list that publishes the names and salaries of potentially hundreds of thousands of people who could not afford to buy a house. This doesn’t seem aligned with the original intent of the disclosure act.

Some features of the Ontario Sunshine List 2024 are as follows:

  • The highest paid employee took a pay check of $1.9M
  • Public sector employees were paid salaries in excess of $100K
  • The Ontario Sunset list top position is held by Kenneth Hartwick, CEO of the electricity Crown Corporation with a salary of $1.93 million followed by chief strategy officer Dominique Miniere $1.2 million and chief projects officer Michael Martelli drawing $1 million as salary.
  • Public sector workers were paid counting in Bill 124 compensation
  • 2024 budget revealed that Ontario deficit will triple
  • CEOs of the Hospital for Sick Children and the University Health Network figured in the top 10 list and each drew a salary of $850,000 each while CEO of the provincial transit agency, Metrolinx drew a salary of $838,097.
  • 17 professors or associate professors at the University of Toronto drew a salary in excess of $500,000

Caroline Mulroney, president of the Treasury Board, stated in a release,

“The largest year-over-year increases were in the hospitals, municipalities, and services, and post-secondary sectors, which together represented approximately 80 percent of the growth of the list.”

Also Read: Hims & Hers CEO Andrew Dudum Says Wants to Hire Student Protesters Backlash Underway

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Hims & Hers CEO Andrew Dudum Says Wants to Hire Student Protesters Backlash Underway

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Hims & Hers CEO Andrew Dudum Says Wants Hire Student Protesters Backlash Underway

Andrew Dudum, CEO and founder of Telemedicine Company Hims & Hers is facing flak on the social media after his reported statement that he wants to hire students and protestors who are taking part in the protest in support of Palestinians in Universities across the US.

A number of tech sector founders has also condemned his statements.

Dudum had posted on X,

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“If you’re currently protesting against the genocide of the Palestinian people and for your university’s divestment from Israel, keep going. It’s working. There are plenty of companies and CEOs eager to hire you, regardless of university discipline.”

He also posted a link to a page showing open positions at Hims & Hers.

X users have expressed their disapproval and have even called for a boycott Hims & Hers, and others said they are selling their stock in the company.

Cofounder of Palantir Technologies as well as the managing partner of early stage venture capital firm 8VC Joe Lonsdale responded on X and said

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“Real moral courage doesn’t involve joining a mindless mob, chanting anti   U.S. and other woke pablum, following instructions not to debate or discuss your positions at all yet being indignantly righteous, while large numbers in the mob chant for violence and block Jewish students.”

While Hims & Hers spokesperson said Dudum were not available for comments, old posts by Dudum have been unearthed which puts in context his actions. Days before the horrific attack by Hamas’ terrorist against Israel on October 7, Dudum had posted –

 “In pursuit for peace: Our leaders need to embrace nuance.”

Dudum further explained that he is a Palestinian American and had roots in and family in the West Bank and Gaza and said Hims & Hers’ values are based on a respect for human dignity and life.

Dudum wrote

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“It is upon those values that I believe all leaders and CEOs should use their platform today to call for an immediate cease   fire. To actively recognize Israel’s right to defense and also recognize the means and manner in which they are responding violates international law. I ask us to find nuance, and share our voice today to help save innocent lives.”

Deadly protests have hit U.S. college campuses through last month and protest encampments have sprung across more than 40 colleges nationwide.

Police crackdown is on and there have been more than 1,900 arrests or detainments following a wave of activism at universities across the country.

Hims & Hers is a Telemedicine Company that links consumers with licensed healthcare professionals, enabling access to high-quality care for conditions related to sexual health, mental health, and more. It also offers its own range of products and is in a partnership with Los Angeles-based Hustle & Co. on media relations.

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Also Read: Brazil Dam Collapse Amid Heavy Rainfall and Flood; Watch Video Here

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More Trouble For Microsoft, OpenAI: Eight US Newspaper Publishers File Lawsuit For Copyright Infringement

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More Trouble For Microsoft, OpenAI: Eight US Newspaper Publishers File Lawsuit For Copyright Infringement

Trouble for Microsoft and OpenAI over copyright infringement is not coming to an end, as they face several lawsuits for violating copyrights.

On Tuesday, eight US newspaper publishers sued Microsoft for illegally reusing articles in AI products.

The 98-page long lawsuit further accused the tech companies of attributing erroneous information to the publishers.

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The eight newspapers that have filed the lawsuits include the New York Daily News and the Chicago Tribune.

They allege that OpenAI’s ChatGPT used their copyrighted articles to perfect its language models without permission.

The lawsuit was filed in a New York federal court on Tuesday. The publishers claim that OpenAI’s large language models, GPT-2 and GPT-3, were perfected using datasets containing text from their newspapers.

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The language models are designed to produce text based on human inputs and reproduce copies of the publishers’ works. Microsoft has been indicted for using newspapers for its Bing search index but seldom provided links to the original articles. Four months ago, The New York Times also filed a lawsuit against OpenAI, accusing the tech giant of using data from its past content. It also asked for consent for usage, criticizing the use of full article excerpts in chatbot responses.

The latest lawsuit filed by the eight news outlets also demanded consent and fair value for using their content to perfect the AI language models. The lawsuit alleged that the AI tools literally regurgitate their content without directing users to the content source.

The lawsuit filings stated, “This lawsuit arises from defendants purloining millions of the publishers’ copyrighted articles without permission and without payment to fuel the commercialization of their generative artificial intelligence products, including ChatGPT and (Microsoft’s) Copilot.”

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The eight newspapers that instituted the lawsuits are as follows:

  • The New York Daily News and The Chicago Tribune, both owned by Alden Global Capital
  • The Orlando Sentinel
  • The Sun Sentinel
  • The San Jose Mercury News
  • The Denver Post
  • The Orange County Register
  • The St. Paul Pioneer Press

OpenAI’s Response

OpenAI did not directly respond to the accusations but stated that it takes great care to support the news and media outlets. It also stated it is in continuous partnerships and conversations with various news outlets around the world to explore new opportunities, discuss problems, and seek out solutions.

Microsoft also stated that OpenAI has entered into fruitful partnerships with a number of publishers, which includes The Financial Times, The Associated Press, Spanish conglomerate Prisa Media, and Germany’s Axel Springer.

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