The Future of Fractional Ownership

The future of fractional ownership is here. While people automatically think “timeshare” when hearing the term fractional, a host of new companies have eliminated the problems with timeshares, and offer unique opportunities for vacation-goers.

Let’s examine some of the negatives associated with timeshares.

Timeshares never appreciate. No matter what the salesman tells you at the energy-charged timeshare presentation, your timeshare points will not increase in value. They don’t appreciate since you are buying into a depreciating resort, not a family home.   

However, single-family residences in vacation destinations have typically gone up in value over long periods. By investing in a fractional home, instead of a fractional resort, an investor has more opportunity to profit.

Timeshares are hard to sell. Sometimes, they are impossible to sell. eBay is filled with timeshares that priced at $1, and even those rarely sell. So, how do you know your investment in fractional ownership won’t turn to dust? One company promises to overcome this by guaranteeing the sale of your fractional interest in eight years.  The homes are sold as whole ownership, and investors cashed out. This eliminates the struggle to unload your fractional if you no longer find vacationing in the same area appealing.

Co-Owner Worries? –  People hear of fractional ownership and hesitate. How will other owners treat the furniture? Will they smoke in the home? What if others don’t pay their share of maintenance costs? The solution to this is professionally managed policies. With a fractional property management agreement in place, these fears are alleviated.

Research suggests that vacation homeowners use their homes for less than six weeks per year. Factoring in the costs of maintenance, interest, opportunity cost, and taxes, the expense for the average vacation home owner is higher than renting. This explains the high turnover of homes in vacation destinations. An average second homeowner doesn’t get the use out of their homes they originally planned.

Instead of a full vacation home purchase, if investors purchase four to six weeks in a home, they save money and save time. Owners also have no maintenance hassle and can purchase a nicer residence. A few of the fractional homes for sale in 2019 so far have been:

• $304,000 for four weeks ownership in a 3,200 square foot Kauai, HI penthouse with ocean views.

• $254,000 for four weeks ownership in 3,400 square foot Cape Cod, MA waterfront home valued at $2.7 million.

• $309,500 for four weeks ownership in a $3.4 million residence in Watersound Beach, Florida.

Other homes are for sale as fractional in Florida, Colorado, California, Hawaii, and the Caribbean. Many of these are fractional homes valued in the $2 million to $10 million range.

Gone are the fears of losing one’s timeshare investment. Gone are the days of staying in a poor quality studio sized resort room with overpriced annual maintenance fees. Gone are the days of shady timeshare sales pitches.  Fractional home ownership is exploding across the U.S. as investors realize the benefits.

Author: Clint Harritt
As a partner in Luxury Fractional Guide, Clint has been worked in real estate lending, REITs, timeshare ownership, and marketing for 10+ years.  Since 2017, Clint has managed the growth of Luxury Fractional Guide to become the leading source of fractional ownership on the internet.

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