Let’s figure out details about fractional ownership in real estate.

What is fractional ownership in real estate?

You own a share of the real estate itself and are issued a deed for the property. Fractional ownership in real estate is a way of buying a portion or percentage of a property. The asset – in this case, a real estate property – is divided up into several parts or fractions, making it available for purchase to a larger number of co-owners with fractional interest.

With fractional real estate investing, the cost of the property is split between multiple shareholders, and so is the profit. As the value of the property increases, so does the rental income and equity.

Is it necessary to have managerial experience or solid capital to invest into real estate fractional ownership?

Fractional ownership is a good chance of investment when you want to invest in real estate but don’t have the capital. Unlike traditional real estate investments, fractional real estate ownership does not require you to deal with the hassle of maintenance and upkeep of a property. A management team will usually take care of all those necessary details, including reports, marketing, and billing. 

The property is usually maintained by a third-party management company that looks after the repairs and maintenance, and is paid proportionally by the co-owners of the property. 

With fractional ownership properties, a property operator or management platform will create a Limited Liability Company (LLC) or Limited Liability Partnership (LLP) to own the property. The percentage of shares you own in the LLC or LLP will determine how much of the property you own and, therefore, the proportion of rights you have. 

Why is it better to invest in real estate fractional ownership than in timeshare?

• When you buy a timeshare, you’re buying a portion of the time spent in the property. With fractional ownership, you’re purchasing equity. 
• In the fractional ownership model, the buyers are far fewer than timeshares should be. Because of this, a fractional owner has more usage rights and longer periods of occupancy in the property multiple times a year.
• Fractional owners can easily build portfolios without spending years saving up for a down payment. 
• Fractional owners can control more over how a property is maintained than timeshare owners.