How to structure a real estate startup that offers fractional ownership in commercial properties
Hi, I am looking to start a Real Estate Platform that offers Fractional Ownership in A Grade commercial Properties. My model is slightly different from current startups in the Fractional ownership space. Need proper legal advice on how to structure my startup.
Current Model : Platform will identify commercial properties that generating good rental income, talk to its owners, negotiate the price, do legal check & lock the deal. Once the price is locked, platform then puts up the property on their website & advertise about the opportunity to multiple small & medium budget investors. Minimum investment 10 -25 laks (varies from company to company). Platform pools a group of users until the value of the property is reached. Once the the value is reached, they proceed with the property purchase. An SPV is incorporated & the property is registered on its name & every investor gets a proportionate share in the SPV. The maintenance & management of this Property is then transferred to the Platform. Ex: Imagine the property is 1000 sft & per sft price is 10,000 rs which would make the price of property - 1 crore. Assume 10 investors have invested 10 laks each. Every investor would get 10% share in the property i.e the SPV. The platform which is a separate entity (LLP / Pvt Ltd), will charge a fee for doing all the work mentioned above (% commission on sale value). They also charge yearly fees for maintaining the property. The platform doesnt own any share in the Property / SPV. By following this model, the Platform doesnt get classified into a AIF or CIS.
My Model : I dont intend to take any fee in CASH. Rather, I would like to keep my fee as a share in the Property itself. I would increase the per SFT price by 3% which would take the price to 10,300 & i would sell only 97% of the share which would be sufficient to fund the entire property. Hence My profit on this transaction would be 3% of the property value. Keeping the profit as a share would not make sense for smaller transactions, but when the property value is large & rental income generated is good, i believe its better to keep my profit as a share. Withdrawing the profit in cash would also attract income tax to it. So i decided to keep my profit as share in the property. However, i read in a few articles that such fractional ownership based startups donot get classified as AIF (Alternate Investment Fund) & CIS (Collective Investment Scheme) only because the Platform is just facilitating the transaction & it does not own any share in the SPV & its role is confined to just maintaining the property.
So how should I structure my company to facilitate such a transaction. Need legal guidance & advice.