With the boom in the real estate sector in the country, innovative ways are arising to get ownership of property, especially holiday properties, at a reduced price burden.
One of the methods is smart ownership. Also known as co-ownership, it is a relatively new concept in India but is gaining popularity as a way for people to invest in real estate without having to buy an entire property at a higher price.
What is Smart Ownership?
Smart ownership is a real estate investment model where multiple investors purchase shares in a property. This allows investors to own a piece of real estate without purchasing the entire share of the property outright.
With smart ownership, individuals can purchase a share of a property, typically between 10% and 50%, and share the costs and benefits of ownership with other co-owners.
Smart ownership can be given on several properties but is usually used for holiday homes. This allows the person to stay occasionally on holidays and also rent out for the rest of the year. Now let’s check out the advantages of smart ownership.
Advantages of Smart Ownership
Diminished Management Responsibility
Any house requires regular maintenance so that it can be rented out or remain in good condition when you go there for holidays.
As service-providing companies usually maintain properties such as holiday homes, you do not need to take care of the property on a regular basis.
Moreover, if you are co-owning the property, the other co-owner is also responsible for maintaining the property, thus reducing your sole burden to do the same.
Lower upfront costs and Shared Risk
One of the biggest advantages of smart ownership is that it can significantly reduce the upfront costs of buying a property.
This is because you are only buying a share of the property, not the entire property. The exact amount of the upfront costs will depend on the size of your share and the value of the property.
However, in general, you can expect to save a significant amount of money by buying a share of a property instead of buying the entire property on your own.
Moreover, this will also help to reduce the risk of financial loss as you are only investing in a share of the property. If something happens to the property, such as a fire or natural disaster, your financial losses will be limited to the value of your share.
Smart ownership can also offer you more flexibility than traditional homeownership.
This is because you can choose how much time you want to spend at the property. If you only need it for a few weeks or months each year, you can rent it out to others for the rest of the time.
This can help you offset ownership costs and make it more affordable. Investing in a good property can give you a higher return on investment in the long run.
Moreover, as you are buying a small share of the entire property, it would be much easier to sell the property whenever you desire as opposed to selling the entire property.
For example, if you were to buy a Rs. 50 Lakh-worth cottage in Himachal Pradesh property outright and only use it for two weeks each year, you would be paying for a property that you are not using for 350 days of the year.
This could be a significant financial burden.
However, if you buy a 10% share of the same property and only use it for two weeks each year, you could rent it out for the rest of the year and make enough money to cover your costs.
Finally, smart ownership can also be a great way to meet new people and make friends. When you own a share in a property, you’ll be part of a community of other owners who share your interests.
For example, if you were to buy a share in a vacation property, you would likely get to know the other owners and their families.
You could spend time together at the property, go on excursions, and even have barbecues and parties. This can be a great way to make new friends and create lasting memories.
Things you should be Mindful of:
Lack of awareness
Smart ownership is a relatively new concept in India, and there is a lack of awareness about it among the general public. This can make it difficult to attract investors and get smart ownership projects off the ground.
Moreover, you can also face difficulties selling smart ownership assets if you need to do so. This lack of liquidity can make it difficult to get a good price for your asset, and it can also make it difficult to access your money if you need it.
High transaction costs
The transaction costs associated with smart ownership can be high. This is because a number of different parties are involved in a smart ownership transaction, and each party may charge a fee.
These fees can add up, and they can make it difficult for people to afford smart ownership.
Therefore, it is important to make sure that you can afford the monthly payments and any other associated costs, such as property taxes, insurance, and maintenance.
Risk of fraud
There is a risk of fraud associated with smart ownership. This is because there are a number of unscrupulous companies that are trying to take advantage of people who are interested in smart ownership.
These companies may promise unrealistic returns, or they may not be properly registered. It is important to do your research before you invest in any smart ownership project.
Therefore, it becomes pertinent to check out dependable companies in order to ensure you can easily buy property without the risk of fraud and unnecessary costs.
The one company that is expanding its business in this domain is ALYF. Let’s check out the case study of ALYF.
A Case of ALYF
ALYF is a technology-enabled platform that enables people to buy holiday homes through a smart ownership model.
The company was founded in 2016 by two entrepreneurs who saw an opportunity to help the middle-class and upper-middle class in India own homes without having to pay the full upfront cost.
They mainly sell holiday homes in Goa. ALYF allows the owners to rent out the holiday home while at the same time managing and maintaining the property, thus giving end-to-end hassle-free solutions to smart owners.
The organisation is growing rapidly and is expanding its business to other locations. This shows how this sector is growing and what it offers to potential buyers looking to purchase holiday homes at a lower cost.
In a rapidly evolving real estate landscape in India, smart ownership has emerged as a transformative concept, offering a flexible and cost-effective way for individuals to invest in property.
With reduced burdens of management and shared risks, smart ownership opens up avenues for affordable co-ownership and investment opportunities.
The rise of technology-driven platforms like ALYF has further streamlined the process, providing end-to-end solutions for aspiring smart owners.
As this innovative model gains traction, it not only redefines traditional notions of property ownership but also fosters a sense of community and new connections among co-owners.
Smart ownership represents a paradigm shift, empowering individuals to navigate the real estate market with ease, affordability, and the promise of unforgettable experiences.