🎄 Investor Trends, ADUs, and Fractional

The State of Real Estate Investing in 2024

The property management industry is undergoing significant transformation as investors contend with rising costs, tenant challenges, and economic uncertainty. With rent growth slowing and expense inflation cutting into cash flows, investors are now laser-focused on Net Operating Income (NOI). After fourteen years of easy money and favorable market conditions, we’ve returned to a period of normalcy—and for many investors, this is uncharted territory. Home price appreciation, once a safety net, also appears to be cooling, with economists offering mixed predictions for what’s next.

To provide clarity, The Harris Poll, commissioned by Jordan Muela (LeadSimple) and Peter Lohmann (RL Property Management), surveyed over 750 real estate investors to create the PM Trends Report. The findings highlight critical trends, investor priorities, and opportunities shaping property management’s future. Whether you self-manage or partner with professionals, understanding these insights is key to improving operations, reducing risk, and protecting profitability.

Before diving into the results, let’s acknowledge two truths. As Mark Twain famously noted, “Lies, damned lies, and statistics” remind us that data doesn’t always tell the full story. However, credibility matters—and when it comes to property management insights, Jordan and Peter are among the most trustworthy sources out there.

A Closer Look at the Investor Profile

Customer research in residential real estate investing can be difficult due to nuanced details. For example, if 80% of a property management company’s business comes from accidental landlords—owners renting out a previously occupied home—they likely aren’t “investors” in the intentional sense. These individuals may use property managers, but their expectations differ dramatically, and they are unlikely to grow their portfolios unless you can find another home priced as if it were 2015, with 2024 rents.

While we are not certain the complete investor data is in the final report, the segmentation is worth noting. The research focuses on two primary groups: investors “currently using” property managers and those who have “never used” them. What about investors who tried professional property management and walked away? Segmenting their experiences would add nuance, but for brevity, we’ll focus on key trends.

To get a better handle, here is the investor profile located within the report. 

Some Trends We Found Interesting

1. Net Promoter Scores (NPS) are rising: NPS averages of +39 means customers are much happier and willing to refer than just a few years ago, where some measures came in the negatives.  This might be from venture backed startups cooling off, better tech to support, or simply better focus on execution, but it’s nice to see.  

2. Investors increasingly value property managers: The share of properties managed by third-party property managers has grown from 30% in 2017 to 36% today. Investors are starting to recognize the benefits PMs provide:

• 85% agree PMs make managing rental properties easier.

• 77% believe PMs help reduce legal liability by ensuring regulatory compliance.

• 71% say PMs make their rental properties more profitable.

3. Cap rate compression isn’t slowing investors down: Despite NOI being squeezed to breakeven or worse, many investors remain optimistic. Nearly one-third of investors are actively looking to acquire new properties, even in what professionals consider one of the toughest markets in decades. Much of this is due to pre-2021 investors sitting on strong gains and anticipating long-term opportunities.

4. Competition Drives Upgrades in Single-Family Rentals (SFR): A new phenomenon is emerging in the SFR space: amenity upgrades. As inflation erodes rent growth, investors are increasingly focusing on property improvements to remain competitive. This shift underscores a new reality—investors can no longer rely solely on market conditions for reliable rent increases.

According to the report,  the top five investor priorities for 2025 are:

Some Challenges Remain the Same

Cost concerns: Maintenance and unit turns remain the toughest problems in property management. Self-managers often tackle these tasks themselves, saving thousands compared to quotes from professional vendors. While outsourcing should provide efficiency, price sensitivity continues to hold many investors back.

Control issues: Investors hate unexpected expense calls (“This broke” or “That needs fixing”). At its core, this challenge comes down to trust—a recurring theme in the property management industry. Building trust will remain critical for PMs aiming to retain customers.

According to the report, many investors maintain significant oversight even when working with PMs:

• 63% approve repairs above a certain threshold.

• 56% approve tenant selections.

• 51% make final decisions on rent adjustments and lease renewals.

Companies like Blanket and Lineage are focused on shifting the industry where we believe it needs to go, but we’ll see.  It takes a different type of owner/operator to grasp an elevated asset management strategy vs a traditional property management operation.  

Incentives still matter: It’s clear after reading through this report investors still want their property manager aligned on outcomes.  Are we increasing margins, reducing costs, making efficient decisions?  This one is a double-edged sword, because proactive managers could be misinterpreted as revenue farmers for their own businesses, doing “unnecessary work” to increase maintenance revenues.  This is almost always false and goes back to trust and planning.  The wealth management industry is a great case study for this.   

Our Takeaways 

This report is a must-read, even for those who self-manage their portfolios. Whether driven by economic pressure or industry maturity, the residential property management sector has improved significantly over the past decade. For entrepreneurial-minded investors, property management might also be one of the most promising businesses to start right now—provided you have a clear understanding of where the industry is heading and are willing to navigate the challenges of a lower-margin service model.

What we’re most optimistic about is the shift toward intentional residential investors. These investors aren’t just looking for short-term solutions—they want trusted, aligned, and forward-thinking partners focused on 2035 goals, not just 2025 outcomes. For those ready to meet that demand, the opportunity to redefine property management has never been greater.

The Benefits of Adding an ADU

The granny flats are coming, and it seems there is no stopping them. 

These living spaces, also known as Accessory Dwelling Units (ADUs), are now legal in 14 states. They are defined as small secondary homes that have their own kitchen, bathroom and entrance and share the same lot as the main residence. Policymakers are starting to view them as a partial solution to the acute housing shortage in the US, which is estimated to be between four and seven million homes.

But there is a long way to go before ADUs will bridge the housing gap. 

The San Francisco Fed estimates that there are some 1.6 million single-family homes with ADUs in the US today, less than a third of the 5.4 million owner-occupied condos in the country. 

Andres Murrillo, founder and CEO of Los Arcos Development, which is based in West Covina, Calif., and specializes in modular ADUs, multifamily, and single-family homes, said the lack of education is a barrier to the industry’s growth. Plus, most localities have different rules about what size is permitted, where the unit can be located, what triggers an impact fee, etc., that are intimidating to many who might be interested. 

“For the average investor, it’s just not feasible,” Murrillo said. “Finding factories is hard, communicating with the cities is difficult.”

His company, which sources its modular units at a factory in Tijuana, Mexico, can act as a bridge for potential investors. These units are trucked on to the site and assembled by crane, but a lot needs to happen before that.

“We are the broker in the middle, and we provide the education, that part is missing now,” he said. “We get together with the homeowner and let them know what can be built in their backyard and what the setbacks are, etc.”

Murrillo believes that building ADUs units in factories makes sense, and he says markets like southern California and Austin, Texas, are primed for exponential growth.

“Modular can be applied in a lot of different ways,” he said. “We see them as game-changing in the ADU space.”

Griham Living is also going the modular route, though it is leveraging global supply chains and automation to build steel-based ADUs. They are sourcing the steel parts in India, measuring the unit and creating the holes for them to be screwed together on site. There are also pre-drilled holes in the two-by-two and two-by-six structural steel for plumbing and electrical.

“When you put these things together, it’s like putting together a lego,” Ganguly said. “The  level of skill required to put these together is a lot less and they go together a lot faster.”

Easing Regulations Propel Growth in the ADUs

States and cities nationwide have recognized that ADUs are a quicker fix to the housing crisis than building projects from the ground up since they tap into existing infrastructure.

“The big shift is that our regulations are changing,” Murrillo said. “Some cities put up speed bumps to make it more difficult, but across the board we are seeing that they must take your application.”

California has the most ADUs in the US, with at least 201,000, followed by Washington (over 77,800), Arizona (over 36,000), Oregon (35,906), Hawaiʻi (over 14,700), and Idaho (over 12,700). 

New York City, one of the most regulated housing markets in the country, approved a plan in early December to permit ADUs in certain neighborhoods in the five boroughs, which could bring some 20,000 of these units to the city in the next 15 years.

Earlier this year, California took steps in 2024 to further loosen ADU regulations. (The state’s first law establishing ADUs dates to 1982.) 

Those changes include:

• Separate Sale of ADUs. The restriction on selling ADUs separately from the main residence was removed. It was previously only allowed in very limited circumstances.

• No Owner-Occupancy Requirements. Property owners may continue to build rental ADUs after the rental unit provisions set to expire in 2025 were permanently extended. 

• Pre-Approved ADU Plans. By January 1, 2025, all cities and municipalities in California will be required to develop a program for the preapproval of ADU plans and streamline the process.

With younger and older generations struggling with high housing costs on the coasts, ADUs are seen as part of the solution: some 61% of California ADU owners said they built their ADU to house a family member. 

ADUs also offer a more affordable rental option. In California, the median ADU rent is less than 30% of the median income of two-person households in the San Francisco Bay area, according to a 2021 survey. A significant portion of the state's ADUs were affordable to people making less than 80% of the local median income. 

How ADUs Can Enhance a Property Value

ADU rentals bring in a new source of income and increase a property’s value, an average of 35% in the biggest cities, according to a 2021 study by the National Association of Realtors.

Selma Hepp, chief economist at CoreLogic, has had good luck renting out on Airbnb the garage she converted to an ADU at her house in Burbank, Calif. She makes about $3,000 per month renting out the 500-square-foot studio apartment to tourists, who visit nearby Hollywood and Warner Bros. Studio.

“It was surprising to me but it’s been pretty much booked out since I started,” Hepp said, though competition has increased. “I noticed other neighbors have put in ADUs.”

She used to be booked pretty solidly, but these days there are times where she has a few nights open a week or so in advance. Like any good economist, she lowers the price to goose demand.

Hepp does not have any interest in investing in properties remotely, since, as she said, “stuff always comes up.” She self-manages her unit with the help of her parents. She’s happy with how it turned out, but given her high-demand day job, she has no plans to expand her real estate portfolio.

“It’s fun and great that you get the extra money but there is stress involved,” Hepp said. 

The recent loosening of regulations in Los Angeles, which included modifications to parking requirements, expanding the maximum permitted size to 1,200 square feet, and more types of ADU types permitted, have encouraged homeowners to explore investing. 

Some developers have also taken advantage of ADU legalization to build more density. In Austin, Texas, real-estate developer Scott Turner replaced a single-family home on a large corner lot with two single-family homes and two ADUs.

Los Arcos Development has modular ADU units that are either 275 square feet, 480 square feet and 600 square feet. They can also provide a two-bedroom, two bath model that is 960 square feet, which Murrillo said is too big for most ADUs. Cities often demand larger “impact fees” for these larger units, because of how they can affect traffic and school populations.

“The 600-square-foot unit is going to be our sweet spot, we think,” Murrillo said.

The cost per square foot of a Los Arcos unit, including site work, is $230-260 per square foot, meaning a homeowner can expect to spend about $156,000 for the 600-square-foot ADU. His company also does garage conversions, which range from $250-290 per square foot.

Griham Living has ADU models on its site that list from $150,000 to $450,000 on its site, and Ganguly said they can build for about $300-400 a square foot, which includes site work but not permitting.

“If we can get this properly dialed in we think we can get these homes built at a better price,” he added.

Local regulations can slow down the approval and construction process and increase building costs. Homeowners often need help with the application process, which is where companies like Los Arcos come in.

“You feel as if you have to know someone so we help navigate the process,” Murrillo said. “When people are doing this on their own it’s harder.”

What to Expect When Adding an ADU 

Like all construction projects, building an ADUs can disrupt daily life, and there are benefits and drawbacks once they are in place. Here is what to expect:

Pros of Adding an ADU

Income Source: ADUs, which can serve as either short-, mid- or long-term rentals, can provide a steady income stream. When it comes time to sell the house, an ADU will add value.

More Usable Space: The space created when an ADU is added could be put to multiple uses, including a workshop, home office or studio, guest suite or play space for children. Their primary use, living space, can create a multi-generational family environment.

Create Community: When renting an ADU, the landlord can choose the neighbor, possibly creating a bond of friendship. There is the possibility of helping each other out with housework, cooking and babysitting.

Downsizing in Place: A homeowner who does not need all the space of a primary home can move to an ADU at the same address, maintaining the same social ties and habits they are accustomed to.

Cons of ADUs

Losing Storage: Building an ADU, whether a garage conversion or a custom-built unit, takes space from parking or storage. It can also reduce access to outdoor space, take room that could otherwise be dedicated to a garden, or subsume a favorite spot for a lawn chair or hammock.

Disruption of Daily Life: When tenants move in, the hassles and joys of being a landlord join them. This means repairs and house maintenance, unless a property manager is hired.

Cost of construction: ADUs are generally more affordable than building a full-size home, but they are not cheap. Here are some estimates:

• Detached ADUs are the most costly option, because separate utility requirements and more extensive site work are required, with prices ranging from $120,000 to over $300,000.

• Prefab ADUs ranging from $100,000 to $350,000, depending on size and finishes.

• Site-built ADUs can be fully customized, but can vary in price from $150,000 to $400,000+, based on complexity and location.

• Attached ADUs can utilize existing utilities and structures, and lower costs, about $100,000 to $250,000.

Murrillo said one of the challenges with his modular ADUs is finding contractors who want to take on the site and finish work, since the jobs tend to be small and do not require a lot of manpower.

Financing an ADU

Freddie Mac offers a product that can be used to finance an ADU, and in some cases lenders will take into account rental income when assessing whether or not a homeowner qualifies. 

CHOICERenovation allows lenders to deliver loans to Freddie Mac where the borrower uses the loan proceeds to pay for renovations or property upgrades, including ADUs. 

But financing an ADU is similar to financing other home renovations, though adding income through ADU rentals can help a lender justify the higher costs of constructing the unit.

• Cash-out refinance: The money borrowed pays off the existing mortgage, and adds the amount needed to cover an ADU build to the original mortgage. The extra amount you can borrow is usually limited to 80% of your home equity. Cash-out refinances are less attractive when mortgage interest rates are high. 

• Home equity loan: These allow owners to borrow up to 85% of the home's equity as a lump sum and pay it back in monthly at a fixed interest rate.

• Home equity line of credit (HELOC): HELOCs provide a credit line of up to 85% of the equity in your home. The borrower can draw down the line of credit as needed and pay back only what you use, typically at a variable interest rate. 

• Second mortgage options, including home equity loans and HELOCS, use the home as collateral, which could put the home at risk if the loan is not repaid.

• Home construction loan: These loans pay out money to the builder in stages, and usually have higher interest rates and require better credit scores than mortgage loans. During construction, the homeowner makes payments only toward interest. Between six and 24 months after getting the loan, it must be paid back in full or a mortgage obtained to cover it.

• A renovation loan: This type of construction loan allows a homeowner to borrow against its estimated value after renovation.

• Reverse mortgage: Homeowners ages 62 and up can use a reverse mortgage to borrow against their home equity. Lenders recoup their money from homeowners when they die or fail to meet other conditions. A line of credit or lump sum from a reverse mortgage could finance an ADU.

• Borrowing or receiving gifts from friends or from a family member, including the person who will live in the unit.

Northwest Arkansas

Northwest Arkansas (NWAR) is an up and coming real estate market based on its affordability, population growth, and robust economic fundamentals. This area comprises 5 cities: Bentonville, Fayetteville, Rogers, Siloam Springs and Springdale, which together experienced a population growth rate of 2.4% annually in recent years. Projections suggest continued strong migration, largely fueled by the area’s strong job market. In 2024, the region saw steady rent growth across submarkets, with Fayetteville leading with a 4.9% increase. This growth reflects strong leasing activity and reflects robust demand. 

• Bentonville: median sold price was $466,600 up 2.5% year-over-year

• Fayetteville: median sold price was $369,900, the same as the previous year

• Rogers: median home sold price was $415,000 a 10.9% hike year-over-year

A Thriving Local Economy

• Walmart's new headquarters in Bentonville is nearing completion, representing a $1 billion investment and the opening is planned for January 2025. This company’s state-of-the-art campus emphasizes sustainable design, and the retail giant has long been a driver of the area's economy.

• Alice L. Walton School of Medicine in Bentonville is a $250 million investment, set to begin its inaugural class in 2025, which will boost the health care sector activity and increase professional opportunities.

• Tyson Foods, and J.B. Hunt are also big players in the region. Tyson has its headquarters in Springdale and employs some 139,000 people. J.B. Hunt, a transport company, is based in Lowell and has thousands of workers in the state.

• Education, health services, government, and manufacturing sectors are showing significant growth. The education and health services sector added 2,700 jobs in 2023-2024, a 7.7% increase.

• Fayetteville, home to the University of Arkansas invested $136 million in research enterprises focusing on applied research facilities. 

• The US 412 Bypass, currently under construction, represents a $180 million investment to improve regional connectivity, further boosting the area's attractiveness to businesses and residents.

Best Neighborhoods:

Downtown Bentonville

• Proximity to Walmart HQ, vibrant cultural attractions, and boutique businesses.

• Attracts young professionals and corporate employees looking for urban living options.

• High demand for short-term rentals (STR) and luxury townhomes.

University District in Fayetteville

• A steady rental market fueled by university students and faculty.

• Opportunities exist for single-family homes and duplexes catering to students.

Rogers' Pinnacle Hills

• A commercial and residential hub with upscale shopping, dining, and entertainment options.

• Ideal for investors targeting affluent tenants seeking premium rentals.

Springdale

• Home to Tyson Foods and a growing manufacturing sector.

• Offers affordable SFR opportunities and is experiencing infrastructure development.

West Bentonville and Bella Vista

• Bella Vista is a retirement-friendly community with growing popularity among younger families due to its affordability.

• West Bentonville features newer neighborhoods, ideal for families and professionals.

2 Theale Ln

This new construction is less than a 17 mins drive into downtown Bentonville this new construction features access to a Clubhouse, Golf, Playground, Park, Lake, Pool, and Trails/Paths.

The Investment Thesis

→ With Walmart moving more of their tech into Bentonville and other fortune 500 companies calling NWAR home, this area continues to grow.
→ This zipcode has seen a 7.1% population growth over the past 5 years.
→ Located within the Bentonville school district

 Property Details

 Financial Projections

Interested in Learning More?

*Appreciation based on 6% growth rate. 

Daniel Rybin - Orchestrated Flips, 100 Days at a Time

Daniel Rybin, who has now flipped more than a dozen homes and built several from the ground up, did spend a summer helping to remodel a houseboat, though he said he didn’t learn much.

Before he bought his first house, a fixer-upper, “I had no real construction experience but it’s not like working for NASA,” he said. 

These days he specializes in buying rundown homes, fixing them up fast, and getting them back on the market.

“I fell ass backwards into the flipping part because I had to remodel our first house,” Rybin said, just before the Covid pandemic hit. “My wife and I had our first kid and the only house we could afford was a fixer upper. The first house we did we hired somebody off Facebook marketplace to do the demo.” 

Not that there weren’t some bumps in the road, not unexpected for a guy who shifted careers from currency trading to taking on homes with mold and termite damage and bringing them back to life. He studied economics at the University of Florida.

“I told myself I’ll figure it out. You make some mistakes,” he said. “You learn to call three guys for plumbing. You call the first guy and you know nothing, you call the second guy and you know a little bit more, and by the time you talk to the third guy you can sound like you know what you are talking about.”

Rybin shifted full-time in real estate about three years ago. He’s been busy fixing up houses and growing his family: he and his wife have 5 children, all under the age of 7, and includes 6-month-old twins. They live in Marietta, Georgia.

“I found a mentor and an agent,” he said. “Then I bought another house and another one, always bigger houses and in nicer neighborhoods.”

He built his construction team out, and they learned to operate at the speed he demanded. He says he tries to get from close to close in 100 days.

“By the time you’re on the 12th one,” Rybin said. “You have your crews and it’s a well-orchestrated dance.”

This interview has been edited and condensed for clarity.

What is your special real estate superpower?

I am really good at project management. In my remodeling business, I get all the guys in there at once — the framers, the roofers, the kitchen guys, the electrician, etc. I tell them all to go find a place in the house where they can work. I’m managing the project and getting it done as efficiently as possible. I can do a flip and the closing to closing only takes 4 months. If you take an extra month that’s 25 percent less efficient and if you annualize that it’s costing you a lot of money. When you don’t know what you don’t know you stumble your way through it. If you grew up in construction and learned how to do things a certain way, that’s how you do it. I got to start from scratch and do the things the way that work best for me and the subcontractors who are not used to my style of working eventually get with the program. I didn’t bring in any good habits to my construction projects but I didn’t bring in any bad habits either. 

What was the hardest lesson you learned early on in your real estate journey, and how did you overcome that and persevere?

Don’t take the lowest bid. The second time around if you take the lowest bid, you learn there’s a reason why it’s the lowest bid. The guy does not show up on time or he does shoddy work and then you call the second guy and he comes in and fixes it. The way I built my team is that I reached out to my plumber and asked him if he knew an electrician who did quality work like he did, then I got that guy in. The Hispanic and Latino network all know each other and they get somebody who’s good. I learned to speak construction Spanish.

What advice would you offer to somebody looking to get into real estate or grow a portfolio?

Find a mentor. That is the most important thing to avoid headaches and get in with the right people. That first flip, after I had closed up all the walls, I called this agent and he turned out to be an investor. He plugged me in with his designer and framer and his plumber. They plugged me in with the networks that they have. That mentor was the best thing that happened to me

Among the strategies a property owner could pursue — long-term rental, mid-term rental or short term, (Airbnb), co-living, flipping — what works best for you, and why?

For me, it’s the flipping and construction business. I don’t have to deal with tenants and all that comes with that. I control the flip. I renovate even if there is mold or termite damage, I just fix it and move it on. I only take on the worst flips. I assume there is going to be water damage or termite damage and I can build that into my business model. What scares off other people does not scare me. I can get houses at the prices I want. I have the highest risk tolerance of anybody I know in the flipping game. When I buy a shitty house I know I’m gutting the house down to the studs. The places I remodel are only in the best neighborhoods and if I buy the worst house in the best neighborhood and put in the finishes and design that I know my buyer is going to pay for that in this neighborhood. All the systems are new. The high-quality business model has always worked for me.

What do you think is the biggest issue investors face in 2025 and beyond?

I believe the market won’t be homogenous, and by that, I mean even within the metro Atlanta area, some markets will outperform others. Suburbs and in-demand intown neighborhoods are likely to do better. This trend won’t be consistent across the country—Florida, for example, is already looking like a mini crash.

The disparity between areas, both locally and nationally, is going to surprise people. Previously, everything rose and cooled off together, but this time, the movement won’t be as uniform as it has been in past years.

Fractional

Fractional simplifies real estate investing with a collaborative ownership model that tackles two key challenges: accessibility and liquidity. By allowing individuals to pool resources and co-own properties, it lowers barriers to entry while offering tools to manage shared ownership seamlessly. The platform’s secondary marketplace enhances liquidity by enabling investors to sell partial ownership without requiring a full property sale.

With its focus on community-driven investing, flexible tools, and liquidity solutions, Fractional offers a practical way to build wealth through real estate without carrying the full financial burden alone.

The Founder’s Story

Stella Han, Fractional’s CEO, grew up helping her family flip homes in the Bay Area, sparking an early interest in real estate. Combining this experience with her technical background as an engineer, she recognized the need for a better way to manage shared property ownership.

The idea for Fractional emerged when Han and co-founder Carlos Treviño partnered to co-invest in properties. They quickly encountered challenges—from sourcing deals to managing legal contracts and day-to-day operations—that made co-ownership cumbersome. Fractional was created to simplify these processes and make collaborative real estate investing seamless.

“We saw an opportunity to combine technology with community-driven investing,” Han said. “Our goal is to help people build wealth together by removing the barriers that have traditionally made real estate inaccessible.”

Since its launch, Fractional has gained significant momentum, raising $5.5 million in 2021 and securing a $15 million Series A led by Fifth Wall Ventures in late 2024—a clear signal of the platform’s potential to reshape real estate investing.

Looking forward, Fractional aims to enhance its tools, expand liquidity options, and grow its investor community, positioning itself as a key player in making property ownership more accessible, social, and collaborative.

How Fractional Works

Fractional is designed to support every stage of collaborative real estate investing. It operates as a social platform where investors can co-own and manage properties, offering tools to simplify everything from deal sourcing to ongoing management.

Key Features:

• Community Collaboration: Users can connect with like-minded investors, form teams, and collectively purchase properties. Fractional provides a framework for managing co-ownership through customizable legal contracts, helping to avoid the friction that often comes with shared investments.
  
  

• Deal Sourcing: Fractional allows users to discover and share investment opportunities, simplifying the process of finding viable properties.
  
  

• Property Management Tools: Built-in tools assist with financial projections, rental distributions, expense tracking, and ongoing decision-making for co-owned assets.

Enhancing Liquidity with the Secondary Marketplace

Liquidity has long been a challenge for real estate investors, as traditional property ownership often means capital is tied up for years with few options to exit. Fractional’s secondary marketplace addresses this problem by allowing investors to sell their partial ownership without requiring the entire property to be sold.

This marketplace offers investors increased flexibility, enabling them to exit positions through partial deed sales—a feature rarely available in real estate. At the same time, Fractional’s legal infrastructure ensures smooth ownership transitions, fostering collaboration even when changes occur.

To facilitate these transactions, Fractional charges a 5% transfer fee, which supports the platform’s operations while keeping the process streamlined for users.

By combining liquidity with a clear collaboration framework, Fractional lowers the barriers traditionally associated with real estate investing, giving investors the ability to balance long-term ownership benefits with greater financial flexibility.

Why Investors are Taking Notice

Fractional’s approach appeals to a wide audience—from seasoned investors to those taking their first steps into real estate. By enabling direct ownership, the platform claims its users can earn approximately 40% more than those investing in REITs or crowdfunding platforms, largely due to significant tax benefits and direct asset appreciation.

Investors also benefit from:

• Lower Costs: No annual platform fees, making it cost-effective compared to many alternatives
  
  

• Financing Options: Fractional partners with lenders to offer both short-term and long-term loans for LLC-owned properties
  
  

• Banking Services: Dedicated accounts for deposits, expenses, and reserves simplify the financial management of co-owned properties

Some Words of Caution

Partnering with others in real estate can be incredibly empowering—it can enable your first deal or accelerate portfolio growth. However, poor or misaligned partnerships can lead to fractured relationships, mistrust, or issues much more costly than the real estate itself. Taking the time to form the right partnerships is essential before committing money to work. When you find the right team, it will feel clear and aligned.  

Fractionals website in its current form is almost unusable.  The bones of the business model are really encouraging, and believe they’re approaching the community design in a much more intentional way than say a BiggerPockets.  The user experience today is rough. 

With their recent funding, there’s an opportunity to hire experienced community builders to enhance engagement and improve the platform’s usability. Without this, maintaining an active, collaborative community may prove difficult.

How to Get Started

If you’re like us and appreciate direct ownership vs alternatives like REIT’s, head over to the fractional.app and sign up.  There are no upfront costs, no minimum accreditation, and you might just find your first or next real estate investment partner!

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