Johanes Ribli Gorilla Motivation: Start Planning For Early Retirement With Stable Passive Income from Fractional Ownership

Johanes Ribli Gorilla Motivation:

Has an early retirement thought ever crossed your mind? Well, if yes, no judgments. But have you ever felt early retirement is way too lofty of a goal for you? Retirement planning is difficult enough when you intend to work until you reach your full retirement age. Well, not anymore all thanks to the stable passive income from commercial real estate fractional ownership investment.

Retirement is typically linked to old age. But, with many young people choosing early retirement in recent years, this expression has taken on a new meaning. In their early 50s, the new retiree generation is exiting the workforce and transitioning into retirement. As enticing as not working and enjoying a calm lifestyle may appear, it is a difficult goal to achieve. The earlier you retire, the less time you have to save and invest for a pleasant and secure life after retirement.

Retirement planning entails more than merely conserving money. A recent poll found that the current population of Indian retirees laments not accumulating enough money throughout their lives. Furthermore, those who are currently planning for retirement expect to save for at least six years longer than their predecessors. Retirement planning is extremely significant in India due to rising life expectancy, an increase in nuclear homes, and the lack of a social security system. 

So, what is retirement planning?

Retirement planning means making plans for your life in the future in advance so that you may still accomplish all of your objectives and goals on your own. Setting retirement goals, estimating how much money you’ll need, and investing to boost your retirement savings are all part of the process. Pre-retirement planning is a goal-oriented process in which people work to prepare for retirement. This method enables retirees to establish reasonable expectations of the changes that will occur throughout the transition. It also assists them in developing a long-term plan for living after retirement. Pre-retirement preparation is a wide term that includes concepts such as self-perceived retirement readiness.

Real Estate Investments: An important component of retirement planning investments

There are five reasons why you should incorporate real estate into your retirement planning portfolio.

Real estate properties build up to bigger prices over time while being less hazardous and fickle.
Investing in many properties will help you reduce risk and diversify your portfolio while also providing consistent passive income flow via rental income and capital appreciation.
If the real estate market has a downturn, it is usually a passing phase. The industry is very elastic, with few setbacks.
Capital returns are the most profitable of all returns. The property’s value will rise over time, and when you decide to sell it, you’ll be able to command bigger profit margins.
Finally, real estate investors may take advantage of many tax breaks when purchasing a home. If you take out a house loan, you can save up to INR 1 lakh each year on the principal amount. Investors can receive a tax credit of up to INR 2 lakhs if it is a shared property.

Residential Vs Commercial Real Estate: Best Passive Income Investment For Retirement Planning?

Real estate is always a flourishing sector, and it is the safest and most reliable sort of investment in today’s market conditions. The two principal sub-sectors of the real estate business are residential real estate and commercial real estate. 

Commercial buildings, which are frequently categorized as office, retail, or industrial, have significantly longer lease terms than residential properties, and these leases play an important role in establishing their value. 

Rental income on commercial properties runs from 5% to 12%, while returns on residential homes vary from 3-4%. As a result, commercial investments are more likely to be cash-flow positive than residential ones.

The return on investment for commercial buildings is frequently greater than that for residential structures. Commercial properties are frequently leased for more than 10 years, with the majority of the money going to the owner. The ROI on residential property is around 4-10%, whereas the ROI on commercial property is approximately 6-12%.

Net leases are more common in commercial real estate than gross leases. It indicates that they must pay council rates, insurance, land tax, maintenance, and repairs. In the meantime, in the residential market, these expenses are billed to the landlord, which is why commercial buildings are more likely to create a positive cash flow.

Because commercial buildings are rented for a longer period of time, the owner receives a stable income. The leasing period for residential houses, on the other hand, is fairly short. Furthermore, because the notice period is quite short, the tenor may leave soon. Commercial properties, on the other hand, require more notice, therefore this is not the case.

Fractional Ownership: An Affordable Way To Invest In Commercial Real Estate For Retirement Planning

As you can see from above, commercial real estate investment is the best type of retirement planning investment.

But, doesn’t the thought of investing in commercial real estate make you dizzy or want to run away? Well, if you are not aware, commercial real estate properties are valued in crores. So? That would mean you need to have deep pockets ( as in crores) to take part in investing in these properties. Sheesh! You would have to bid goodbye to your early retirement dreams and that assured passive income, isn’t it? 

Well, no. Before you give up on that early retirement dream of yours, I bring some good news. The fact that you do not have crores does not exclude you from investing in commercial buildings. You may proceed even if you only have lakhs. With fractional ownership, this is feasible. For example, Assetmonk allows a person to invest in those premium office properties for as little as Rs. 25 lacs.

Fractional ownership is a way to make passive income for your retirement years by investing in real estate without purchasing a property. It enables investors to own a piece of commercial property and enjoy all of the benefits that come with property ownership. It is better suited for high-end commercial real estate with multiple risks. It’s also appropriate for a single investor who might not be able to fund the full property. Investors can acquire a share in high-end commercial property and produce continuous rental income while growing their wealth over time. It is popular among institutional investors. It’s also becoming a realistic investment choice for savvy middle-class and individual investors.

But How Does Fractional Ownership Ensure You Passive Income For Your Retirement Years?

Accessibility: Fractional Ownership ensures every individual investor gets to invest in those Grade-A properties. A premium quality office building in Hyderabad, for example, costs Rs 300 crore to rent. Such a significant investment is often reserved for HNWIs. But, with fractional ownership, one may now become a co-owner of a property for as little as Rs 10 lakh and earn annual rental returns of 6% to 10%. An investment of this type might provide an annual rental income of Rs 60,000-Rs 1 lac. In comparison, a comparable residential property investment would earn only 1.5 to 3 percent. The pandemic had a substantial influence on residential real estate, with property prices dropping by 2% to 7% in the previous year.
Stable Asset: During the global shutdown, the commercial real estate sector in India slowed but swiftly rebounded in Q3. You might rely on passive income real estate investments like fractional ownership instead of volatile financial markets. According to industry watchers, commercial renting increased concurrently as a result of India’s huge outsourcing business. International enterprises occupy more than 63 percent of office space in India. Commercial property values in India are soaring and are anticipated to surge in the future years. As a result, it is an excellent time to invest in fractional ownership.
Longer lease period: Residential tenants regularly leave, leading the property owner to miss rental money until a new renter can be located. However, in the case of commercial real estate, each business facility has a three-year lease period. However, the lease can be extended. It only assures a steady income. Enormous multinational organizations, banks, and information technology firms with large budgets are among the tenants in high-end complexes. They pay their rent on time every time. Furthermore, due to the time, effort, and money invested in converting the flats into workplaces, such tenants frequently renew their leases. However, it is advisable to invest in a pre-leased commercial property for higher profits.
Passive Income Via Rental Income: Commercial property fractional ownership provides a high return on investment through ongoing rental revenue and appreciation. Over the past five years, commercial property investment in India grew at a CAGR of 16%. Aside from the value rise, if you buy through a reputable fractional ownership business like Assetmonk, you may expect a 15% increase in rental income returns over the next three years. It is included in the rental agreement to protect against future inflation and ensure that your investment remains steady over time.
Appreciation of Property: Investing in a fraction of a commercial property is incredibly cost-effective and yields a twofold return. The first benefit is direct investment returns, while the second is property appreciation. The value of your share will grow since you own a piece of real estate. Its institutional investors are well-known. It is, nevertheless, becoming a feasible investment alternative for ordinary and individual investors.

Johanes Ribli Gorilla Motivation