Frequently Asked Questions
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What is fractional real estate investment?
Real estate investment comes with a higher ticket size. When investor invest as a co owner along with other investors in a larger property it is called fractional real estate investment. Share of the income that the asset generates, in traditional investments it is associated with large capital. In fractional investments investor can invest in to multiple options with fraction of capitals.
What are the different investment opportunities available?
Arbeta offers investment options of both residential and commercial properties. In commercial properties we offer to invest in to larger size commercial floor plates where the floor plate will be given as a lease to a MNC or equivalent larger companies for longer duration. Arbeta will take care of the management activities. Instead of leasing to any third party Arbeta may run a co work space in the same property and will generate return for the investor.
In the residential space Arbeta will run the Co live space or the service apartment in order to generate the return for the investor. Arbeta takes care of all the management and tenancy.
What is the minimum investment?
It varies and depends on the project you are selecting. The minimum investment can start from 10 Lakhs and multiple of that.
Is Arbeta Lounge regulated by any government body?
Arbeta Lounge Private Limited is a registered private limited company under MCA. The associated service providers and professionals are registered under (SEBI) & AMFI and RERA.
Who can invest with us ?
Both resident individual and NRI can invest with us. Our commercial properties are not associated with any bank loans. So both NRI and residents having inevitable surplus can invest in to the commercial properties. Our residential properties can be invested with bank loan.
What is real e state Portfolio?
Investor can be a part of multiple projects through fractional investment and can diversify his/her investments.
How can I diversify through Arbeta?
Investment risk can be reduced with appropriate diversification of holdings. In the case of Arbeta , investors can diversify by investing across locations, tenants (technology, financial services) and asset classes (retail, office, residential units ). Investor can take part in our other opportunities of co work space and co live proposition.
How Arbeta Identify the Project ?
We deal with the builder or developers with brand value, very good credit history and having better cash flow. So the project is selected on 3 basic parameter:
• Only with CAT- A Builder
• Project needs to be premium - Means location, connectivity and Business value
The ROI Expectation needs to be as per our commitment?
Arbeta has the experience in this field for quite few years. We are already in to management of commercial and real-state properties. There are a lot of projects in our co work space segment lined up in coming years
Arbeta negotiates with the builder prior to the launch of the projects. It helps to get a better value compared to the launching price. For investor it helps them to get the appreciation even before the launch of the projects. Also we are focusing on a larger unit size so we are always in a position of negotiating a better price.
What if something goes wrong with Arbeta? Is my investment safe?
As the ownership lies with the stake holder it will be no impact to the investor. The investor can decide a new partner who can manage the the property or can liquidate their investment.
What are Arbeta Fee?
We charge an annual management fee of 1.0% and a performance fee of 15% at the time of sale after the investor has made 8% annual returns. 8% is the hurdle rate.
For e.g. If an investor had invested Rs. 100 and the investor makes Rs. 108 at the time of exit, we DO NOT charge any performance fees as we believe we were not able to deliver returns greater than the risk-free rate. However, if the investor had made Rs. 115 at the time of exit, we will charge 15% of Rs. 7 (115-108) i.e. Rs. 1.05 as our performance fee. This way our fees are aligned with investor returns.
What does the management fee collected by Arbeta covers?
The Management fee covers the costs for collection of rents, payouts to investors, TDS filing,
GST filing, facilitating property tax payments, compliances of the SPV, sending monthly MIS of the SPV insurance and other online and offline activities.
Will there be a management fee when the property is not tenanted?
No, there will be no management fee charged to investors for as long as the property is not tenanted.
Are there any other hidden charges?
No! There are no other charges.
How do you keep my personal information secure?
We take the security of our platform and privacy of all your data extremely seriously. Therefore, we have built a system with best-in-class security and privacy features.All your data is hosted on secure cloud networks and all sensitive client data is encrypted and stored with 256 bit SHA encryption. Also, we will never share your data with any third party
Do you offer any guarantee on returns?
No we do not guarantee any returns. Real estate is an asset class like any other financial investment instruments. Only difference we are creating by generating some extra alpha over the traditional return without any hassle of managing the property by the owner and worrying about tenancy of the property.
What is an SPV?
SPV is called special purpose vehicle. For each and every listing we create a SPV with having a common objective. Arbeta manages the SPV. The pool investment of the investor is transferred to SPV escrow account and SPV registers with the builder.
What is the investment process?
KYC DOCS- Pan card, Adhar Card ,Photo Graph, Digital Signature Agreements -
Investor need to be a part of onboarding agreement with Arbeta Longe Pvt ltd. Based on SPV (Special Purpose Vehicle) the investor may need to do sales agreement with the builder or part of the formal arrangement or fit out agreement. Investor can always check the Lease/Rental Agreement, Due Diligence Report, Title opinion and the Sale Deed are shared with the Investors.
Why DEMAT AC is opened in the name of the Investor?
After on Boarding we need to have compulsory a 3 in one demat account with our service provider where the investor will transfer the amount as per our agreement. The same amount will be remain invested in to liquid fund till the date of further demand. Demand can be construction linked in case of under construction project or can be till the registration date. Till that date the investment will continue to earn return of 6 to 7%.
Step:: Deal discussion => Presentation about the available options => Agreement Sign and on boarding=>Money transferred to Demat account => SPV is created => SPV registers with the builder.
At the end of the process investor will get the allocated shares of the property.
How do I transfer money for my investment?
Investor need to transfer the amount from saving account to their 3 in 1 Demat account where the amount will be remain invested in to liquid funds till the date the actual allocation to builder happens. The investment is made through a Special Purpose Vehicle. Your investment is routed through the Escrow Demat Ac to SPV Account , the proceeds of which are finally transferred to the Seller from the SPVs bank account. You will need to transfer your investment from a domestic, NRE or NRO account to the Escrow Demat Account.
Do I need to be present for property registration?
No you do not need to be present for property registration. As the part of the SPV you are the share holder and all the share holders nominate someone who can work as signing authority or you can say bear the power of attorney to register the property on behalf of the SPV with the
Builder. However at the time of onboarding you need to go through a physical meeting with our team members for signing the relevant documents.
Will I need to travel to the location of the property or such?
It depends if you are willing to visit. As we try to give you entire presentation before the actual investment but if you still want to visit we will arrange the same. However we need to have one meeting for onboarding and other paper works.
What happens if a property fails to be fully funded?
The chances are likely to be less. As we list our project only after 25% of the funds are already ready from our existing investor. The investment duration from the listing date till the fully funded dates are 6 months. Even after we fails to fully fund the project we return the investor money with the gain we able to manage from the liquid funds which we use to park the amount.
Is my liability limited to my capital?
As a shareholder in the SPV, your liability is always limited to invested capital.
Who takes care of tenancy and management
Arbeta Lounge takes care of all tenancy management and related activities for generation of the revenue.
What are the risks associated with these investments?
Market Risk, Liquidity risk and tenancy risk are the part of real estate investment asset class. How ever with fractional investment the liquidity is better as compared to traditional option as small ticket size investor is easy to find. Post COVID 19 world has seen a different kind of risk which never existed post World war 2. Such situation may delay the payments by few months or may result some decrease in the net IRR. Our in house company is already in to co work space management and we are already dealing with lot of companies in terms of space management.
What sort of returns can I expect?
We do not guarantee any returns on the assets listed on our platform. However, our expected returns is 14-16% IRR over a period of 5 years. It includes 7 to 8% property appreciation and 7 to 8% rental yield based on the location and project category.
Is there any lock-in on my investment?
Yes there is an initial 12 month lock-in from the time the property is registered. You are free to sell your holdings post that. However it is always advised to remain invested minimum 3 yeas in orderto get a good appreciation also the longterm capital gain can give you some additional benefit in terms of taxation.
Are there any tax deductions on rental returns and other tax implications?
Yes. We deduct a 10% TDS before remitting returns to you on a monthly basis. Also for NRI the deduction may be on higher side. But NRI can provide us the CA certificate declaring their net income is less than the threshold value of the taxation in order to avoid the TDS.
If Arbeta manages the property as co work space the tax arrangement in terms of rental yield can be different where the investor will be treated as business participant and can save tax on the same.
Capital Gains: The profit on sale of commercial property is considered as capital gains. The same shall be long-term, if the property was held for more than 24 months and will be taxed at 20%.
However, if the property was sold before 24 months had passed, the same becomes taxable as short-term capital gains and is taxed as normal income. In house team of Arbeta can help you on the same.
When & how will I receive my returns?
Rental yield will be transferred to the registered bank account of the investor 10th of the proceeding month. Apart from this other yield related to capital gain interest dividend etc will be transferred to the registered account with us time to time.
What are my Exit options
1. Asset Sale
After the competition of 3 years if min 75% of the investor agrees to sale the property then we can initiate the process of sale. Arbeta can help you arranging the potential buyer for the same.
2. Private Sale
You are free to sell your fraction/holding to anyone you may know, such as friends or family. Arbeta will facilitate such arrangements. Investor may need to bear the charges for such transactions.
Investors decide the exact time and price at which to sell their investment. It means investor can quote the price above or below the valuation as per the NAV of the price quoted from the Arbeta on its 6 months report.
3. Resale Market
You can take the help of Arbeta in order to sell the fractional holdings of your in open market. As the invest ticket size are lesser as compared to other real estate properties with similar premium ness and yield it will be easy for us to find a buyer. Arbeta may charge up to 2% of the property cost in order to facilitate such options