FracSpace, as the name suggests, was set up to address the common real estate challenge by offering fractional real estate ownership. It allows us to invest in shares of real estate while enjoying potential returns on it. The company offers a seamless investment experience starting with Rs 10 lakh and an annual return of 8%.
All of this from the comfort of your house as their executive will give you all services at home, including clearing your doubts. This visit is done on their own expenses and customers are not charged a penny for this.
Their customer service as well as follow-up routine is worth praising. So, if you are planning to invest in a property, FracSpace can be a possible option because you don’t need a huge amount plus you are saved from all the hassle of property hunting.
You can find a good deal in 15+ locations like Goa, Hyderabad, Kerela, Munna, along with international places like Dubai, USA, and Bali. The properties include resorts, holiday homes, and rental apartments.
| Startup Name | FracSpace |
| Founders | Unnath Reddy |
| Industry | Real Estate and Renting |
| Company Classification | Private Limited Indian Non-Government Company |
| Headquarters/based-in | Hyderabad, Telangana, India |
| Idea | Property tech startup allowing Indian middle class to co-own property(s) through Fractional Investment Model |
| Revenue | Rs 40 crore (FY 2024), estimated Rs 25 crore (FY 2025) |
| Date of Commencement | 2022 |
| Number of Customers | 200 (worldwide) |
| Number of Employees | 46 |
Competitors: Arka Hreem Real Estate Opportunities Fund and Arka Credit Fund I
Problem: Real Estate Concentrated in Higher Society – Rich Getting Richer
Property prices have been on the rise ever since we all remember. Unnath Reddy was already a corporate employee working in the real estate industry earning 1 lakh/month.
An incident at a luxurious 5-start hotel inspired him to begin something impactful rather than just the old real estate business, which he was already doing.
The Incident: When he arrived at the hotel to get some coffee in his track pants, Unnath was escorted out. But when he re-visited in his casuals looking all smart and RICH, the staff was hospitable towards him. Chairs were pulled for him and extra cake and cookies were offered to him with his coffee.
Does a middle-class person not deserve this kind of treatment?
This thought stuck into his mind at the age of 21, he decided to set up an affordable coffee restaurant.
Motive: To give the taste of luxury to the Indian middle class.
He tried his hands at everything; service apartments, mini resorts, staycation properties, and restaurants, but none of the 12 businesses worked for him.
Unnath didn’t gave up and in 2022, with Rs 60,000, he launched FracSpace.
The Solution: FracSpace
FracSpace, a prop-tech startup, enables investors to buy and co-own properties where the cost and benefits both are shared among them. Thus, making property ownership affordable and diversifies the investment risk.
No property is owned for more than 5 years to prevent depreciation and maintain profitability of the investments.
With one-year-lock-in period, investors can exit the deal at any time during the 1st year.
They also have an app for Play Store and iOS where properties are listed and you can filter them as per location and investment goals.
List of services provided by FracSpace:
- Dedicated Residential Care and 24/7 Concierge Services
- Strategic Promotion of Rental Units
- Collecting Rent and Handling Late Payments
- Property Condition Assessment and Documentation
- Managing Escrow Services
- Reselling Frac Units to Investors and Buyers
- Easy Processing of Liquidation or Exit
Business Model: How Do They Make Money?
In general, FracSpace earns revenue through the profit module and the fees they charge for services. They take a certain percentage of stake in the properties fractionally owned. Also, for the maintenance services they provide to the property owners, they are also paid for that.
Challenges/Struggles
For Unnath, his journey has been a learning experience overall where he did what interests him while developing professionally.
- To navigate through complex regulations with patience and persistence.
- To have a problem-solving mindset towards situations.
- To make use of his credibility in the market.
- To sharpen his communication skills to deal with skepticism about fractional ownership.
- To develop a deep understanding of his audience.
- To show the benefits of the concept to investors/stakeholders while dealing with misconceptions.
There is a WhatsApp group for each property and their co-owners. Everything is completely transparent, and everyone is kept in the loop. Bills, guest bookings, and invoices, all are shared in the group or via mail.
Over time, Unnath Reddy is converting FracSpace into a B2C property ecosystem. Co-ownership is still the primary service offered by the startup but now they offer other services like buying/selling/renting properties. It also provides property management, housekeeping, interior consultation and other services to its customers.
Future Vision: What’s Next?
Now, FracSpace aims to expand co-ownership properties and become a travel and accommodation aggregator. Moreover, by the end of 2025, they also want to enable check-in and check-out mechanisms and SaaS services to cater B2B audiences.
Moreover, Unnath aims to achieve Rs 100 crore revenue in the next 3 years.
Key Takeaways: What I can learn from this?
From the story of Unnath Reddy and FracSpace, we understand that following what you want to do is good but only if done in a correct way. Just as his 12 attempts at various startups failed because he was not taking calculated risks and his focus was divided between business & job.
Thus, we need to be focused on one thing to make sure we take the required actions at the right time. If you are planning for any such startup, best of luck with it! Keep reading our blogs for more such inspiring journeys.
