Fractional Ownership ~ What Is It?
Posted Jun 12, 2008 @ 11:45 am, Viewed by 1749 Visitors, Read 1865 Times.
Fractional ownership has been around for some time but it may be a new term to some of us. Popular in some of the tourist areas, such as Tampa Bay, Fractional ownership simply means "the division of any asset into portions or shares". If the "asset" is real estate for example, the deed can be legally divided into shares and each purchaser owns a part of the deed. The assets are taxable, represent equity, and can appreciate or depreciate in value when the property itself changes.
Factionals are not timeshares. Timeshares are, for the most part ,a privilege to use the property for a period of time. While timeshares tend to lose their value quickly, Fractionals follow the market trend of appreciation on the property.
Fractionals appeal to internet savvy buyers, second home buyers, and international clients looking for a piece of property that is probably more expensive than they can afford and in an area where they want to travel to frequently. In terms of cost, Fractionals provide a solution to those that cannot afford a dream vacation home.
How can this concept benefit our sellers? If your seller wants to offer both whole ownership and fractional ownership on his property for sale, they can increase their market exposure for the property. So many sellers are faced with the threat of losing their homes today due to high taxes or maintenance that the option of retaining a piece of the ownership probably has never occured to them. With Fractional ownership, they can share the home with multiple buyers, should they want to retain partial ownership for the winter months.
What are the pros and cons of Fractional ownership? The most obvious pros are the ability to own something you could not afford without Fractional ownership and the con would be the risk involved of each party not holding up their end of the bargain. Besides state and local real estate laws to consider, a thorough and written co-ownership agreement should be drawn up by both parties and reviewed by an attorney. Many professionals recommend a reserve fund be set aside to cover unforeseen costs.
While the structure or concept can be as simple or complex as the parties can make it, Fractional ownership is here in Pinellas County and its popularity is growing.
Robert Lipply heads up the team "Lipply Real Estate" under Remax Realtec of Palm Harbor. Serving the entire Tampa Bay area, our team can help you with any Tampa Bay Real Estate interest. The Lipply Real Estate team ranks in the top 100 real estate team in Florida and in the top ten in the Pinellas Suncoast region. We have the expertise to guide you through the process of homeownership. Whether you are buying or selling a home, we hope you contact us!
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Social Bookmarking3 Responses to “Fractional Ownership ~ What Is It?”
Thank you Daniel for the additional information and resource.
Great post Bob! Fractional ownership is a trend that is definitely catching on in today's market. There is certainly an advantage to motivated sellers to list their property as both a fractional and whole ownership opportunity. Our company, Fractional Retreats, LLC, www.fractionalretreats.com is dedicated to the education of Real Estate professionals, Sellers, and Home-Builders in the area of "fractional home conversion".
Our organization has noticed an increase in awareness to the benefits of fractional ownership in the recent months. It isn't just luxury properties that are being fractionalized. I encourage your readers to keep an eye on the trend of the new generation of "mobile" professionals who can work from anywhere there is cell phone connection or even just an internet connection.
These are an experiential minded group of individuals who value relationships and experiences more than the acquirement of material possessions. They realize they can own fractional properties in several different parts of the globe. They are a results-driven bunch who don't trade time for dollars and are enjoying the experiences that come from traveling and seeing a variety of parts of the world.
We expect fractional ownership and fractional home conversions to be a trend that is here to stay and thrive. As a real estate professional, it is important to educate yourself on how you can impact your clientele with this new budding sector of the market! Thanks for your contributions Bob!
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Fractionals are the wave of the future in gaining access to luxury assets. The Fractional Concierge website (http://www.TheFractionalConcierge.com) is the world’s first website that brings together ALL assets sold as fractionals: Real estate, aircraft, sea vessels, automobiles, recreational vehicles, and everything else from handbags and artwork to dogs and organically grown meats. The website gives you detailed information, pricing and photos on hundreds of fractional assets so you can peruse the many different options.