A Guide to Fractional Ownership for a Vacation Home

Fractional ownership vacation homes provide an alternative for investors to purchase a vacation property. Fractional ownership is a relatively new form of purchasing real estate that many people are considering. Here are a few things to consider about using fractional ownership to purchase a vacation home.

Fractional Ownership

Fractional ownership is a method of purchasing a property that involves several different owners. A property is sold, and the deed to the property is divided equally among the owners. This option makes vacation home ownership much more practical for many people. Since you are getting only a fraction of the property, you will also only pay a fraction of the price. This makes it much more affordable for the average person. In return for your investment, you will get access to the home for a certain number of weeks per year depending on how many owners there are. 

Long Vacations

With this type of real estate purchase, you will be able to take advantage of longer available vacation times. In most cases, you will be given access to the property for anywhere from 4 to 13 weeks out of the year. This provides you with a significant amount of time in a beautiful vacation destination. This is one of the main differences between fractional ownership and timeshare ownership. Most timeshares give you one to two weeks at the maximum. Therefore, if you want access to a vacation property for long periods of time out of the year, this could be the way to go.

Justification of Vacation Home Ownership

Many people can justify spending money on this type of transaction even if they would not be able to justify purchasing a vacation home. Most people use only their vacation homes approximately one to two months out of the year. Therefore, you are paying 12 months' worth of mortgage payments in order to enjoy your property for two months. By using fractional ownership, you can pay for just the portion of the year when you actually use the property.

Scheduling Complications

Although this method has some benefits, any time you involve multiple owners with a property, you are going to have some complications. For example, it can be difficult for all of the owners to get the times that they want in the property. For example, you might have several of the owners who want to have the house around the holidays. However, when you have 13 owners in a property, 12 of them will not be able to get access to the property at a specific time. Therefore, you can make a substantial investment in this type of property and feel as if you never get the property when you need it.

Management Fees

With this type of real estate purchase, you will also generally be required to pay ownership fees. You will have to pay a monthly fee in order to maintain and repair the property as needed. This can significantly add to the overall cost of the purchase.

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