Quick Takeaways

  • Fractional ownership is an investment approach in which the cost of an asset is split between individual shareholders.
  • All the shareholders split the benefits of the asset, such as income sharing, reduced rates, and usage rights.
  • This type of investment split is common in the purchase of expensive assets, such as vacation homes, luxury cars, and aircraft.

Source: Fractional Ownership (Investopedia, Dec. 10, 2020)

Fractional interest ownership, once used primarily with commercial tenants-in-common, has recently blossomed in the vacation home market. Not to be confused with a time-share or a destination club, fractional interest properties can be a sensible and profitable alternative to owning a second home

“Fractional ownership” is used to describe shared ownership of a vacation or resort property by people in an arrangement which allocates usage rights based on time. This arrangement allows only one owner to use a particular home or apartment at a particular time.

Generally speaking, some pros to fractional ownership are affordability, limited vacancy, and divided responsibility among owners; whereas some cons are that selling isn’t straightforward, consensus can be tough, ownership is tied to one property, and it is subject to restrictions.

See References for more information.

Latest on this topic

There are no results
Advertisement