Now a day’s new concept has come into market which is really trending , i.e. “fractional ownership” which people try to correlate with word “Time Sharing” which is not appropriate?
So we will help you out to understand the concept of “Fractional Ownership”. We will make you understand what is Fractional ownership model or time sharing model of leisure or luxury assets.
What do we mean by Fractional Ownership ?
Fractional ownership is any arrangement where a group of people share the ownership or have right of possession of property and also can allocate certain rights to use the said property. The word “ownership” does not means inclusion of timeshare module. But actually some of the fractional ownership models are closer to timeshare model. Fractional ownership is an investment option where investor doesn’t have full money to pay and the cost of property is divided between individual investors. All the shareholders divide the benefits of the property like income sharing and usage rights. This kind of investment is very common in the purchase of expensive properties, such as vacation homes or second homes.
What are the types of Fractional Ownership
The most effective form of fractional ownership is where a group of individuals decide to purchase any property together. They with everybody’s expertise and likings they can decide for right kind of property to buy , can get Legal Documents done for ownership from Legal firm or an advocate , buy the property and then start managing the property by themselves. In this kind of fractional ownership profit margin of seller goes less but the documentation is very hefty being too many investors with equally rights of possession are involved.
Second which is actually very cost-effectiveness options is where developer or builder opens up suck scheme, where the investors are directly searched and given share by the developer or owner of the property with some additional features to the investors of such property. There is a profit which developer earns out of these properties as developer of such properties will be putting money for all legal and administrative expenses and even when some part is sold from the entire chunk of property, developer is still having risk of capital invested in unsold units or parts.
Majorly above options are available for resorts which have good number of rooms or cottages etc built in them. In these resorts the only difference is the level of luxury and services provided and it might happen in the level of ownership of these kind of properties. In these kind of properties generally you have benefits of staying, functions available till certain extent and rest these resorts run normally for tourist or people visiting these resorts. Developer share revenue generated from these resorts with the investors who are fractional owners of these properties.
Fractional Ownership and Vacation Property
If you have bought property as a fractional ownership and still want to want to use the same property for personal needs, you must collaborate with the management companies. These management companies will offer some time to spend in your vacation home and even this is also not compulsory that you get your allotted time always. Fractional owner’s could allow their family members, friends, business associates, and even employees use the property for some of their time. Fractional owners can rent out the balance time available to third parties who are not owners through Management companies and make money from that.
Summary
So to summarize actual fractional ownership is not timeshare, but yes some of the schemes marketed as fractional ownership are Time sharing.
Connect for more at : HEIMAT ADVISORY
Author: NIKITA DAGAR
