What is a Fractional?
Fractional properties are a unique part of the vacation ownership industry. Similar to timeshares, fractional resort property titles are divided into shares or portions (periods of time that the owner can use the property) that individuals can purchase. While in many ways fractionals are a form of timeshare, there are differences that set the two types of shared property ownership apart.
The most significant distinction between fractionals and traditional timeshares is in the duration of time owned by an individual. Timeshare owners may own one, two, or occasionally three weeks of time at a single resort; whereas fractional owners typically hold 1/13 to 1/2 of the title, giving them anywhere from one to six months of vacation time each year. (The most common terms of ownership at fractional properties are between four and twelve weeks.)
Three Reasons to Buy a Fractional
- Fractionals hold their value.
- Fractionals are the pinnacle of luxury vacation ownership.
- You can own a vacation home in a prime location without worrying about year-round costs.
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History of Fractional Ownership
There exists a long tradition of sharing property amongst friends and family. In an official sense, though, fractional ownership is a relatively new development, its inception occurring in the early 1990s in the realm of the Rockies (developing on the heels of the growth of the timeshare industry), an exceptional ski area coveted by vacationers around the globe. By the mid-2000s, hundreds of fractional properties were well established, and the industry is still growing today.
About Fractional Properties
Fractionals are synonymous with luxury for a few reasons, but primarily because fractional ownership tends to be available only in high-end resort destinations (like the base of a ski mountain or prime beachfront real estate). Sometimes called residence clubs, fractionals are like vacation homes rather than vacation accommodations.
Often, fractional properties are actually comprised of clusters of private homes that are guaranteed to be full to the brim with top-notch amenities, designer furnishings and general prestige. Everything about the management, resort grounds and units will exude the excellence you crave in a vacation home. What’s more, the location is bound to be one of the most desirable in the world, so whether that means loving your regular and frequent visits, having high exchange power or both, it’s nothing but good news for you as a fractional owner.
Some fractionals offer personalized services for the owner such as the use of a private luxury car during the fractional vacation stay, the consideration of having the fractional owner’s private belongings unpacked and put away in advance of the owners arrival, as well as customized stocking of the pantry, wine cabinet, or bar.
Another key difference between fractionals and timeshares is what the ownership interest actually represents. Timeshare owners purchase time to use at a resort, whereas fractional owners purchase a real share of real estate. While timeshare ownership is often tied to a deed, because of the short duration of time it entitles the owner, timeshares rarely accrue value over time. Fractionals, on the other hand, often accrue value over time and owners who resell them often do make a profit. (Timeshare owners can resell their properties also, but it’s rarely for a profit.)
Often the real estate on which fractional residences are built are locations where the cost for a single owner to buy and own the real estate would be so high that only the wealthiest individuals could do so. In other words, fractionals are often built on land where the real estate value is so great, individual ownership of the land is simply cost prohibitive. The concept of fractional ownership makes ownership of this luxury real estate possible for many individuals and families.
Because buyers of fractional property are purchasing a portion of real estate, the prices of their property reflect the real estate market more than the timeshare market. If you buy ¼ of a title, you can expect to pay something equivalent to a ¼ of comparable home prices in the area.
To find out more about buying or selling a fractional ownership property, contact the timeshare brokers at VacationOwnership.com at 1-866-633-1030.