With the average vacation home being occupied for just 11% of the year, homeowners have to worry about upkeep and maintenance on the property they do not use for a significant portion of the year.
These costs have made vacation homes become an expensive investment due to the maintenance, cleaning and security costs.
Fractional Real Estate not only solves the recurring problem of caring for a vacation home when it’s not in use but also generates passive income for investors. As a result, making Fractional Real Estate an appealing option to Vacation Home Buyers.
What Fractional Real Estate is?
Fractional real estate, also known as fractional ownership or shared ownership, is a form of property ownership where multiple individuals share the ownership of a property, usually a vacation home or a luxury second-home. Each owner owns a percentage of the property, and they share the use and expenses of the property according to their ownership percentage.
The introduction of tech-oriented fractional real estate platforms has totally digitalized the ownership process, making ownership a seamless one. It is estimated that over the next three years, the fractional real estate market will be worth over five billion dollars.
Types of Fractional Real Estate Ownership Structures
There are several types of fractional real estate ownership structures available in the market. Here are some of the most common ones:
1. Timeshares: Timeshares are a type of fractional ownership where the property is divided into a specific number of time intervals, usually a week, and each owner is assigned a specific time period each year to use the property.
2. Equity Sharing: In an equity sharing structure, owners own a percentage of the property, and their ownership stake appreciates or depreciates based on the property’s value. Equity sharing can be structured as a co-ownership or as a tenancy in common.
3. Private Residence Club: A private residence club is a luxury fractional ownership structure that allows owners to purchase deeded ownership in a high-end resort or a private residence. The club typically provides owners with exclusive access to amenities and services.
4. Destination Clubs: Destination clubs are a form of fractional ownership that provides access to a portfolio of luxury properties in various locations. Members pay an annual membership fee to access the properties, and they can use them for a set number of days each year.
5. Condominiums: Condominiums are a type of fractional ownership where each individual owns a specific unit in a multi-unit building. Owners are typically responsible for maintaining their own unit, while the building owner or management company is responsible for common areas.
Why Fractional Real Estate Is Becoming Very Appealing To Luxury Vacation Home Buyers
Fractional real estate has been gaining popularity among high net worth individuals, luxury second-home buyers, and vacation home buyers for several reasons:
- Cost Savings: Fractional ownership allows individuals to enjoy the benefits of owning a luxury property at a fraction of the cost of buying it outright. Since the cost of a vacation home or luxury second-home can be prohibitively expensive for most individuals, fractional ownership provides an affordable alternative.
- Flexibility: Fractional ownership allows individuals to own a property without the hassles and responsibilities of full-time ownership. Owners can use the property when they want and rent it out when they don’t need it, generating rental income to offset the costs of ownership.
- Diversification: Fractional ownership allows individuals to diversify their real estate portfolio without having to invest in multiple properties. They can own a percentage of several luxury properties in different locations, reducing their exposure to market risks and increasing their chances of generating rental income.
- Shared Amenities: Fractional ownership allows owners to share the cost and use of amenities that would otherwise be too expensive to maintain or use on their own, such as a private beach, a golf course, or a pool.
- Hassle-free management: Fractional ownership comes with professional property management services, which handle all the day-to-day maintenance and management of the property, making ownership hassle-free.
Our Conclusion
In essence, fractional real estate presents an exclusive chance for individuals of substantial means, aficionados of luxury second homes, and those in pursuit of vacation retreats to possess a share of opulent real estate, all without the exorbitant expenses and complications tied to full-time ownership.
Fractional Real Estate Investment Opportunities
If you’re on the lookout for lucrative Fractional Real Estate Investment Opportunities, RealEstateMoses provides entry to distinctive projects that extend beyond mere property ownership.
These projects, available in Africa, North America, Asia, and Europe, not only grant you fractional ownership but also come with comprehensive property maintenance, administration, and marketing services.
For further details, simply click here to connect with RealEstateMoses and delve into a realm where luxury living knows no bounds.
Moses Oyong is a luxury real estate advisor with a passion for arts and culture, music, fashion, and all things luxurious. With a keen eye for beauty and attention to detail. I strive to help my clients find their dream homes that reflect their unique sense of style and taste whilst providing them with the right information to ease the stress of the decision-making process.
