Is Fractional Ownership a Good Investment?

Can you buy a beautiful luxury house and not have to pay a seven-figure price tag?

Fractional ownership is a method in which other shareholders join in share ownership of property. This splits the cost, so you don’t have to pay as much, and you have full access to the property for a set period each year, to travel and live comfortably with your friends and family.

In some cases, you have access not only to your own property but a pool of homes and resorts around the world.

How Fractional Ownership Works

When you buy a fractional property, your purchase price relates to the number of days or shares. Most fractional properties divide the shares into six to eight-week blocks.

Would you rather buy a house on a tropical island for $100,000 or $1,000,000? That’s how fractional ownership works. For $100,000, you can buy 10% ownership of a luxury property on a tropical island worth $1,000,000.

Not only are the owners splitting the cost of the home, but they are also sharing the maintenance costs. You pay a one-time purchase price and then a yearly upkeep fee. “The recession has helped. People realize this is a great alternative to buying a holiday home outright,” claims Dawn Cavanagh-Hobbs, owner of a boutique fractional business in Italy.

Amazing Locations

You can find fractionals in many exclusive, world-class resort destinations in the Caribbean and at major tourist centers in Mexico.

Fractionals first became available in the United States in major ski states like Colorado. The exceptionally high real estate costs and consequent inability for most to afford a vacation home near ski resorts made these locations the ideal fractional ownership locales.

Later, fractionals became popular in golf-oriented and beach communities.

Does The Property Appreciate in Value?

Fractional ownership is the best kind of ownership if you want to invest in your future and family – not for financial purposes.

Fractional ownership in Single Family Residences has the highest opportunity to appreciate in value.   This is because in the future buyers may want to buy the home as a primary home.   This is why vacation funds have started by single-family residences for their investors.

Fractional ownership in a resort will rarely appreciate in value because the property is depreciating with age and becoming less attractive as a vacation destination.

Investing in Your Lifestyle

Conventional real estate developers understand that folks who invest in whole ownership real estate are always looking for some appreciation. Fractional developers also understand this but offer a bit more to the value. Fractional shares are first sold as an “investment in your lifestyle.”

With fractional ownership, you spend longer living in luxury vacation accommodations because there are fewer owners in comparison to a timeshare. You experience the finer things in life together without the insanely high budget.

Fractional properties offer a more relaxed vacation experience. There is far less hustle and bustle for vacationers when arriving and departing because the management team and staff take care of all the details.

Owners have access to state-of-the-art accommodations in incredible locations around the world, as well as staff who attend to every detail from housekeeping, shopping, laundry and even a concierge.

The abundant five-star amenities are extravagant and exclusive.

Bequeath Ownership to Your Children

The benefit of fractional ownership is the memories and the investment you are putting into family. Investing in fractional real estate one might expect some monetary return, but the greatest return of fractional ownership is sharing special times with your family and friends. The ownership can be bequeathed to your children, so the property can be part of the family for generations.

Professional Management

Most fractionals are operated by well-known hospitality companies that have reputations for providing five-star service at exclusive resorts, for example, the Ritz Carlton.

Return on Your Investment

The ROI can’t be defined by money alone. Fractional ownership offers the benefits of a luxury resort with appreciation potential without the costs associated with maintaining a second home. They offer more space, amenities and more access per year than a timeshare, and allow you to bequeath ownership to your children.