There was a time when the door was closed to the masses looking for alternative ways to invest. Recently it’s becoming possible to buy pieces or fractions of almost anything you can think of. From cars to watches to rare books, new companies are increasing their offerings of desirable items for investment. Here’s a closer look at the 7 best fractional ownership companies to build your portfolio.
Rally or as some may know it as Rally Rd. is one of the top fractional investment companies out there today. The list of all the fantastic things they are doing goes on and on. I gave a brief overview of the company a while back; you can find it here. I would consider Rally one of the top 7 fractional ownership companies to build your portfolio.
Rally’s mission from its website is to ‘Democratize alternative investments.’ They began offering collector cars and recently expanded into memorabilia, sports cards, watches, wine, and whiskey. They offer over 40 collector cars to invest in for as little as $20 and have been consistently expanding their car offerings steadily.
The app is very well designed and contains a ton of information about each car investment. A full photo gallery, detailed description, and legal information are listed. A cultural summary is included to highlight the significance of each car and the impact it made on the auto world when it was initially released. For instance, the 1989 offering of the Ferrari Testarossa includes a quote from G.Q. Magazine. They describe the car as, “The era’s dream car, Don Johnson’s wheels in Miami Vice and undisputed symbol of excess to a generation, the Testarossa, is feeling the liftoff of collectability right now…”
Each car is announced with a current value, the number of shares offered, and an offering date and time. You select how many shares you want to purchase and wait a few minutes for a confirmation. Funds are easily transferred to the app through a link to your bank account. You can quickly move money to the app for investment. Also, moving funds rapidly back to your bank account if you need to use the cash. Once confirmed, you are now the owner of a share ( or more ) of a classic car. Safely stored, maintained, insured, and ready for whatever price appreciation may come in the future.
I detailed my experience investing in the 1969 Ford Boss 302 Mustang. I was able to purchase shares in the car for $57.50 per share. After a couple of rounds of open trading windows, the value rose steadily. Shares traded hands back and forth while a new price was set. The current share price sits at $72.10. A nice gain of 25%.
Another one of the 7 best fractional ownership companies to build your portfolio is Masterworks. Masterworks makes it possible for everyone to invest in blue-chip artwork. The artwork is researched by a team of art historians who set out to purchase the top names in the art world. The purchasing team focuses on top artists where they can acquire at an ‘attractive cost relative to value based on historical appreciation rates.’ These works of art are then offered for fractional investment on a per-share basis.
There are two ways an investor can profit on the platform once a share purchase is made. The first way is to sell shares to another investor on an approved trading platform. The second way is an outside collector can make an offer to purchase a painting from investors, where they can vote on selling for a profit or not.
Current offerings include Andy Warhol’s “1 Colored Marilyn,” which was purchased by the company in November 2017 for $1,815,000. Another offering by Masterworks includes Monet’s “Coup de Vent” purchased in June 2018 for roughly $6.3 million. Current estimates of the Monet work is approximately $8.5 million. Here’s a closer look at the Warhol and Monet pieces. The company plans to offer a new piece of art roughly every two months to allow investors to continue to diversify their portfolio.
Otis has a mission to “democratize access to wealth.” A marketplace for alternative assets to allow ‘normal’ people to invest in the same thing as billionaires such as real estate and art for as little as $10. I would compare Otis with Rally, with the exception that Rally focused their offerings on collector cars where Otis seems to focus on a wider variety of assets.
The diversified and expanded lineup of offerings Otis has in store for users is one of the best features. The company plans to bring a variety of assets such as sculptures, sneakers, street art, music albums, eSports, vertical farms, and renewable energy. Otis, much like Rally, plans to retain an ownership interest in each asset, which means they have a vested interest by investing alongside users.
Otis does all the work of maintaining, storing, sourcing, analyzing, and securitizing each investment in-house. All investments are stored in a museum quality storage facility at UOVO Fine Art in Orangeburg, NY, and insured by Aspen American Insurance Company.
Passive real estate investment company Roofstock One is among the 7 best fractional ownership companies to build a portfolio. For as little as $5,000, you can invest in residential rental real estate. Purchase shares in an individual rental home to collect rent without operating responsibilities.
Most people are familiar with the benefits of owning real estate, but few have the large down-payment to get in the real estate investing game. Roofstock One changes the game by offering a slice of a rental home to allow exposure to people not able or willing to buy an entire house.
One of the best features of Roofstock One is the ability to diversify your rental house investments across multiple geographic areas with small initial investments. This concept is great because you gain access to a quality asset class without a significant financial commitment, with no hassle of property management and upkeep to boot.
Much like Roofstock One, Fundrise offers access to real estate investment. One of the ways it differs is by providing access to commercial buildings. Their goal is to provide a way to invest, much like the most successful institutions. Fundrise democratizes access to a once unattainable asset class providing investment regardless of income or net worth.
The Fundrise website gives an excellent overview of different investor levels and plans. For only $500, you can invest in the ‘Starter Portfolio’ and begin choosing your investments. They have three different plans, the Supplemental Income, Balanced Investing, and Log-Term Growth plan. These three plans are structured differently to offer varying degrees of dividends, appreciation, and total return.
The company has invested over $2.5 billion in real estate and looks to have a strong track record. They’ve returned anywhere from 8 to 12 percent annually going back to 2014. From apartments in Washington D.C. to office buildings in Santa Monica, CA, Fundrise has tons of options for the ability to diversify. It would be almost impossible for a small investor to create this type of diversification on their own.
If you’ve ever had the urge to buy farmland and didn’t know where to start, AcreTrader has you covered. AcreTrader provides simplified access to farmland investing through an app on your phone.
The company lays out a few crucial points by saying land is one of the oldest investment classes in the world and has created massive wealth over generations. AcreTrader believes farmland is an attractive, long-term investment by also providing relative capital preservation during downtimes in the economy.
Investors purchase shares in the entity that owns a farm. This is done in only minutes via the website. Each farm is divided into 1/10 of an acre. You can buy as many pieces of each farm as you like.
There are a few key reasons AcreTrader is one of the 7 best fractional ownership companies to build your portfolio. First, farmland has historically been non-correlated to other assets. Second, real assets that produce a commodity provide investors with an inflation hedge. Finally, farmland has protected investors during economic downtimes with low volatility.
Identity Fund is one of the most exciting and thought-provoking fractional ownership companies I’ve come across. From their slogan, ‘Invest in people, not companies,’ the goal is to find people who will succeed and profit alongside them. Buy and sell as demand for shares in the individual rises and falls with their performance.
On the Identity Fund website, they begin to make their case that it’s human capital you want to expose your portfolio to. They describe human capital as “an economic value quantification of a person’s background and track record.” The goal is to help founders to capitalize themselves by issuing shares and connecting those shares to individual investors.
Identity Fund shows a hypothetical portfolio of 15 individuals on its website. Investors select each person based on their background, experience, and goals. You can view full profiles with detailed information about the person’s past work experience, industry, and education. I would rate this concept as one of the more high-risk investments out there but also the potential for higher returns. Investing in individuals sounds like a volatile and risky venture, but Identity Fund aims to deliver with a simplified approach.
There’s an ever-increasing landscape in the fractional ownership and investing land. More and more companies are looking to break down the barriers of traditional finance. It’s going to be exciting to see which companies figure it out and which ones fail to deliver on investor expectations. The one thing that seems to be constant is the desire to access investment options, which were previously thought unattainable. By selecting the very best platforms and diligently researching the fine print, I believe you can create a significant portfolio of exceptionally high-quality assets.