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Fractional Ownership is similar to any other real estate purchase, except that you are only purchasing a fraction of the property instead of the whole property.  You own the property in partnership with others, and share in its use (based on an established schedule) and share in any expenses related to its ownership.

Shares come in a variety of options, ranging from a thirteenth interest (1/13th) to a half share (1/2).  A thirteenth share, for example, provides one weeks use of the property each season for a total of four weeks per year.
 
Management of the property is often taken care of by a third party and the house rules are documented in written agreement between the owners. In most cases, an annual budget is established and owners make monthly or quarterly payments to cover utilities, insurance, taxes and the like.

Not all mortgage companies will provide financing for a 'fraction' of the property, as they are not able to sell the mortgage in the open market. If financing is a consideration, talk to your real estate professional about options.  Many buyers of fractional interests, have the ability to pay cash or use equity in another property to finance the purchase.

Benefits of Fractional Ownership
One of the main reasons people buy fractionals, even when they can afford the entire purchase, is that the expense and responsibility of ownership is reduced. This makes the second home truly a vacation, as you can simply go there, and know everything is in order. At the same time, you have the deed to the property, and you can pass it down through generations in your family, or resell it through a broker. Shares increase in value as the property appreciates, so while it could be considered an 'investment', it is more common a purchase made to establish a getaway to enjoy with children and grandchildren.

Fractional ownership in real estate may provide many of the same tax benefits that full ownership does - consult with your tax advisor for your specific situation.

It is common for fractional properties to be located in resort locations, where condominium or property ownership is priced at the high end. The fractional owner has access to many of the same amenities in the resort area as the full property owner does, while paying substantially less to get in.

If you are considering a purchase of a fractional property and have additional questions, please give us a call at 843 886-9444 or drop us an email.