Shopping for a vacation home or real estate investment opportunity comes with its fair share of questions. Chief among those questions is often, “What exactly is fractional ownership?” In recent years, partial ownership options for real estate have become a popular, trustworthy, and mutually beneficial partnership for people looking to expand their real estate portfolios without eating up their entire savings account. 

Vacation homes can be so much more than a finicky timeshare or a second home that eats away at its own value with exorbitant property taxes: Fractional ownership is the answer! 

Whether you’re just dipping your toes into second-home opportunities or you’ve been poring over investment brochures for years, Nelson Family Estates has the answers to your critical questions about fractional ownership. 

 

What is Fractional Ownership?

One of the first questions we hear when vetting our luxury vacation homes in Hawaii and California is, “What is fractional ownership?” Simply put, fractional ownership is a partnership in which a group of like-minded investors join forces to purchase a property. All owners possess an equal part of the property title, giving everyone an equal stake in the property’s use and value without sticking anyone with the full pains of property taxes, management, and maintenance. 

Management and maintenance are where an organization like Nelson Family Estates comes in: our management company vets potential owners to make the buying and selling process a breeze. Then, we take matters like cleaning and regular home care into our own hands, leaving you and your co-owners free to enjoy your second home (or your third, or your seventh!) the way it’s meant to be enjoyed. Simple access agreements divvy up the year between owners, with five or more weeks granted to each owner based on his or her schedule. Some fractional owners choose to trade off significant holidays like Christmas and Thanksgiving, and it’s always possible to swap a week or two with another owner whenever needed. 

The main benefits of fractional ownership are all the fun and ease of access of a vacation home without the financial drain and headaches of private ownership — and with actual asset ownership, unlike a timeshare. 

 

Fractional Ownership vs. Timeshare

“Hang on, isn’t fractional ownership basically a timeshare?” This is probably the second-most popular question we’re asked at Nelson Family Estates. No, fractional ownership is not a timeshare. Purchasing a timeshare means purchasing a right to a certain amount of time on a property — or a collection of properties — per year. However, a timeshare is not a title-based real estate opportunity: while fractional ownership offers each owner an equal portion of the property title, a timeshare’s title sits with the property owner. 

This means that timeshare “owners” are at the whims of both the property owner and their fellow timeshare partners. Timeshare owners must request access to a property, often as little as two weeks out of the year. Fractional ownership properties, on the other hand, are available upwards of five or more weeks out of the year — the sharing system depends on the number of property owners and your agreed-upon maintenance schedule. 

 

Fractional Ownership vs. Full Ownership 

Finally, let’s clear up the differences between fractional ownership and full ownership. In a full ownership arrangement, a single owner must be responsible for property access, taxes, maintenance, and just about everything else from the nosy next-door neighbors to the demands of the local HOA. Full ownership comes with perks like constant access and the benefits of property valuation in a real estate portfolio, but it also carries all of the risks. 

On the other hand, a fractional ownership agreement allows a group of partners to spread risk, maintenance, taxes, and other financial burdens across a more manageable load. A vacation home that’s a far-off pipe dream for one person may very well be a reasonable option for six to eight partial owners! 

What’s more, if a single owner decides it’s time to sell his or her share, the fractional ownership group can easily re-sell that share and adjust the ownership agreement without having to jump through the endless hoops of a traditional real estate sale. Bring in a management company like Nelson Family Estates, and you’ve got an expert to handle vetting of potential partners, adjustments to ownership agreements, and those mountains and mountains of paperwork that you shouldn’t have to deal with while enjoying your vacation home. 

The benefits of fractional ownership speak for themselves: if single-title property ownership is out of your price range, and a timeshare sounds like too much hassle for too little benefit, then fractional ownership is the obvious choice for you. 

At Nelson Family Estates, we believe that everyone should have access to the shared ownership real estate opportunities they deserve. Get in touch with our team today to learn more about our fractional ownership opportunities in Oahu, Newport Beach, and Oceanside. It’s time to make that dream home a reality!