Fractional Ownership Real Estate
Fractionals are timeshares that are more luxurious
The ownership concept started with timeshares, now fractional ownership is its elite, more elegant younger sibling. The resemblances cannot be denied. Both have the option to be bought as deeded properties, can be shared, rented, sold or left to someone in a will. The big difference? Money. Fractionals are significantly more luxurious than timeshares. They often include many more frills in services and amenities and are typically much larger.
The original concept of timeshares is mainly still going strong today because of its easy accessibility to middle-class America . Timeshares give millions of people the opportunity to travel to fabulous vacation spots for one or two weeks, which would otherwise be impossible, were it not for the model of shared ownership. Fractional ownership caters to upper echelon of luxury-seekers and you receive a little more vacation time, and use a lot more money.
These exclusive properties are like having a second home, rather than just a vacation spot. Most owners will stay at their property for four to thirteen weeks per year or longer. The time does not have to be consecutive and you can return to this spot regularly, several times a year.
The industry behind timeshares and fractional ownership also helps to make the difference between the two more clear. Reputable, 5-star hospitality companies, such as the Ritz Carlton, Starwood and Four Seasons, often run fractionals. You won't find timeshares with that kind of highly regarded, experienced backing.
Timeshares can go for thousands and are often sold by persistent sales people, with "buy now" power-pitches and great finance options. Timeshare customers must be prepared to pay as high as 50% in sales commissions. It's no secret that most timeshares depreciate over time. With rates being high as they are, bank loans or mortgage company loans can be challenging to obtain, regardless of how great your credit is.
On the other hand, fractional ownership can be a multi-million dollar investment, and financing is rarely an option at all because there is so much money involved. Owners looking to purchase a fraction of a property often turn to a home equity line, or pay cash. Fractionals tend to appreciate in value because the demand is greater than the supply, quality and solid structure counts for a lot and they are usually situated in the most sought-after locations.
With countless timeshare resales on the market, the flexibility to free yourself of your unit will be limited and likely quite a frustrating experience. The secondary market for previously loved timeshares has not yet established itself in the world of real estate. While timeshares are dotting every coast around the world, fractionals are tougher to get your hands on. There is a limited number on the market and these numbers will likely stay low because the units are built only on the most carefully selected, desirable properties.