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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Fractional ownership is a way to jointly own . It allows multiple people to own a portion of the property without having to pony up the cash for the whole thing. Fractional ownership gives buyers significant cost savings but comes with some key disadvantages. What is fractional ownership
Fractional ownership is where several people share the ownership of a real estate asset such as a , . Unlike other forms of shared use that provide rights to possess or use but don’t bestow ownership, each person participating in fractional ownership actually owns a portion of the property. Each owner has a direct share in the property, and the value of that share changes as the asset appreciates or depreciates. Furthermore, each fractional owner has a say in what happens to the asset and how it is used. Fractional ownership can take several different forms, including: , which everyone involved equal interest in and rights to a property , which gives each owner a partial interest in the property Fractional ownership is most often applied to real estate but it can be used to purchase many sorts of property, including: Yachts and boats Recreational vehicles Aircraft Sports cars Businesses Fractional ownership vs timeshare
Fractional ownership differs from a. A timeshare allows use of the asset for a defined period only, usually a week, and sometimes in . Time-share owners have no direct say in how the asset is used, maintained or sold. They only own time to use the property — not the property itself. In contrast, fractional owners share responsibility for the maintenance and upkeep of the asset, although it is common practice to contract these duties to a . And they do have a say in how it’s disposed of, as they own a piece of it. They can even leave their share to beneficiaries or sell it to someone else (depending on the exact form the fractional ownership takes). In terms of , depending on the size of their shares, they might also have a lot more time to use the property — typically for a period of up to 26 weeks. Fractional ownership pros and cons
Advantages of fractional ownership
Gives buyers access to a property they couldn’t otherwise afford. Spreads out maintenance responsibilities among multiple owners. Can build if it goes up in value. Might get a portion of rental income when not using property. Disadvantages of fractional ownership
Fewer financing options: You need to find a lender that specializes in fractional ownership mortgages. Possible disagreements with other owners on management, maintenance, use, etc. High maintenance costs and fees depending on your ownership agreement. May be difficult to sell property or your stake in it. Final word on fractional ownership
Fractional ownership is that it facilitates the group purchase of an expensive asset, permitting each owner access to and use of it, according to the size of their share. When property is purchased with fractional ownership, the between the owners in proportion to their ownership. This style of ownership allows you to access property that would otherwise be cost prohibitive while still having an in the property. By owning a portion of it you can benefit from potential rental income when it’s not in use or sell your stake at a profit if it goes up in value. However, there can be communication difficulties with fellow owners, along with hassles from s or municipal authorities who don’t like the idea of a shared home, with its transient occupants, in the ‘hood. SHARE: Rae Hartley Beck is a writer and editor with over eight years of experience in personal finance. Her work has most recently appeared in Bankrate, MoneyWise and Investopedia. Rae specializes in credit card rewards, investing, real estate, home improvement, lending and financial advice for millennials, Gen Z, Gen Alpha and their parents. Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value. Related Articles