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.

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