Empowering investors to reap profit from the real estate sector
Fintech has transformed the way we invest. Not only has it made investments easy and hassle-free, it has also led to the emergence of more sophisticated investment avenues.
We take a look at SmartOwner, a start-up in the real estate space. SmartOwner was founded in 2012 at a time when the fintech revolution in India had not yet reached real estate. Headed by CEO, Vikram Chari, with previous experience running a real estate investment company in the US, SmartOwner brought together a board comprising vital cross-functional experts in technology, finance and venture capital.
The business model
The organisation is a property investment management company and marketplace. It brings together the financial expertise of a large private equity fund, the legal expertise of a law firm, and the real estate expertise of a top developer to a common platform to give real estate investors access to exclusive high-return opportunities. SmartOwner enables investors to profit from the fastest growing asset classes within real estate such as co-working, while also enabling them to participate in more traditional commercial and residential investment opportunities.
As a fintech company, SmartOwner offers ample investment oportunities for several willing investors. Some of them are explained below:
Portfolio management services
This is a fully managed Sebi-registered service, which offers both cash-flows as well as growth-based upside from a diversified portfolio of carefully curated assets of the most profitable investment opportunities across real estate.
Capital growth fund
This is a Sebi-registered Category II Alternative Investment Fund structured to deliver strong upside protection with superior risk mitigation through highly curated opportunities in the fastest-growing locations, cities, and asset classes secured by structural enhancements and rigorous due diligence.
With over 14mn sq.ft of projects valued at more than $1.3bn across a wide range of asset classes, SmartOwner has quickly grown to be ranked within FT’s top 100 fastest growing companies in all of Asia-Pacific. They have delivered an average IRR of 24.72 percent to their clients, beating the market by a substantial margin.
Real estate investment
Real estate is one of the popular asset class in India, historically and culturally. Although it is popular, investors often make suboptimal decisions by limiting their investments to familiar projects or localities instead of seeking the best projects and locations nationwide. Also, real estate investments require a large amount of money. For that reason many investors do not add real estate to their investment portfolio. Real estate investment options have for investors have thus been limited. This has resulted in a feeling that real estate is inherently risky.
New investment paradigm
But there are firms who have shown consistently great IRR from a variety of real estate investments and made investing a hassle-free process by handling all the curation, due diligence, and execution, allowing investors to profit from real estate at the click of a button.
“By developing broad real estate expertise across asset classes and focusing on financial structuring to create the best investment opportunities, SmartOwner has managed to diversify their offerings to cater to a variety of investors, regardless of their investment goals,” said Vikram Chari, CEO.
For instance, their Capital Growth Fund is a great option for long term investors looking to grow their wealth without short term liquidity concerns. On the other hand, the Portfolio Management Services offer a flexible way to profit from real estate while also securing excellent short-term cash flows.
How to invest
Through the comprehensive technical platform, real estate investing can happen with the click of a button. The minimum amount varies by project, for instance, SEBI mandates a minimum investment of Rs.1 crore for the Capital Growth Fund, and Rs.25 Lakh for the PortfolioManagement Services.
What to look at before investing
One needs to do proper due diligence before investing in real estate. As the returns from real estate outpace potential gains from other sectors, and demand continues to outstrip supply, the market is experiencing an increase in both the number of investable assets on offer as well as the number of investment firms that are expanding into real estate.
Unfortunately, the profits from real estate are not going to be democratic even as they continue to rise, and investors should choose firms that have deep domain expertise in order to achieve superior returns.
“The key to consistent market-beating returns from real estate is to evaluate firms on their cross-functional expertise and choose those that have strong in-house experience in the three critical functions of real estate development, legal due diligence, and financial analysis/structuring,” confirmed Chari.