Categories: Vacation Homes

Difference Between Fractional Ownership Real Estate & Timeshares

If you have ever dreamed of having a vacation home, then you have probably considered the possibility of buying into a timeshare. Fractional ownership opportunities are a much more viable option, however, and their popularity and availability continues to increase.

What exactly is a Fractional Ownership?

A fractional ownership property is typically split between 8-10 people, but this number can vary greatly. Each person pays a percentage of the property's sales price, and they all become partial deed holders. A fractional property owner will be able to use the house for an average of four to six weeks a year, and the time will be spread out to accommodate multiple visits. If you buy into a fractional ownership, you will have the ability to sell your share or to leave it to someone in your will.

What exactly is a Timeshare?

A timeshare is a home that as many as 52 different individuals and families buys into. By exchanging an annual fee, you will have the usage of the property for a specific time period. Most timeshares provide all of the parties involved with one week per year. When you sign up for a timeshare, you will sign a contract that states that you do not have any actual ownership rights to the property. Due to this, buying into a timeshare is similar to simply renting a hotel room or a vacation rental, but it is most likely going to be a lot more expensive.

Typical Costs and Locations for Fractional Ownership

Fractional ownership opportunities in real estate began in the '90s as a way to move properties that were located near ski resorts in the Rocky Mountains. The idea took quickly took off, and there are now fractional ownership options around the world, especially throughout Europe. The properties in the Rocky Mountains area range from $20,000 to $349,000, depending on the number of rooms and amenities that the property has.

Some of the most charming properties are located in lesser-known areas. For example, the Borgo di Vagli property in Italy is in the heart of the stunning Tuscany region. A fractional ownership there will cost between $91,000 and $144,000. You will also be able to find fractional ownership opportunities in or near most major cities.

Typical Costs and Locations for Timeshares

Timeshares can be anywhere, but most of them are located around tourist spots in warm areas, including California, Florida, Las Vegas and Myrtle Beach. Timeshares can also be found in tropical areas such as the Virgin Islands. The buy in price varies widely depending on the location and the time of year that you are looking for, but you should expect to pay somewhere between $10,000 and $60,000 for the right to stay in the timeshare for one week each year.

Which is the Better Option?

Owning property is always more viable than leasing it, so fractional ownership is definitely the best way to go. Not only will you be making a viable investment, but a cost comparison also favors fractional ownership. If you get five weeks in a property that you paid $150,000 for, this would equal the cost of paying for five weeks in a timeshare that costs $30,000 a year.

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Published by
Martin Wynn

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