CAN YOU PROVIDE SOME BACKGROUND ON THIS OWNERSHIP CONCEPT AND IT’S INTERNATIONAL APPEAL?
By Sherman D. Potvin FractionalBusiness
Can you provide some background on this ownership concept?
The concept began on Hilton Head Island in the early 1990s. It didn’t really catch on until the Hilton Corp. adapted it into their business model. From there Marriott, St. Regis, and 4 Seasons.
Many other Brands recognized its benefits changing its model to reflect the Resorts that offered it. It did gain some traction and was very popular in “destination resorts” but then in 2006/7 the world came to a halt as the great recession set in. Developer funding for this type of ownership dried up.
In 2011 a company, Equity with CEO Philip Mekelburg called me to discuss their game plan. They would buy or option luxury homes and sell them in Fractions.
I loved the idea as the fractional marketplace was non-existent at the time. I visited him and his small group in Atlanta, Ga. They were all in concert with their vision, they advertised on my website at the time, the fractional bible Luxury and across the internet.
It was slow to build but today they have set the gold standard for anyone considering entering this space. We had no idea back then, but they had founded a business model that would spark an entirely new industry years later.
Yet people still were not enamored by the thought of sharing their home with others? It was a few years later in 2019 that a new company came into being called Air BNB claiming to pay people good money if they would consider sharing their home for a night or two with strangers? WHAT? But wait? Seemingly overnight folks accepted this ridiculous idea and people were all in for offering a space in their home for a bit of “found money” and a new cottage industry was born, spreading across the landscape.
This original small industry has now evolved into the largest hotelier in the world! And the rest, as they say is history, fractional ownership is all the rage in the real estate luxury home industry.
What is this Fractional Ownership all about?
Fractional ownership is an ownership model in which people can enjoy a share (fraction) of a property, typically of luxury goods such as a yacht, private Jet or a vacation home. The concept has become increasingly popular in recent years to invest in expensive items without having to pay full price upfront. With more and more people searching for ways to invest in luxury real estate, fractional ownership is an opportunity whose time has come. See many types of fractional ownership here at Sherpareport one of the best and oldest fractional websites around.
First and foremost, fractional ownership allows people to enjoy all the benefits of ownership without having to shoulder the entire burden of costs.
With a fractional real estate ownership arrangement, owners share the costs of purchase, management, maintenance, and upkeep of a property, making it a much more affordable option to a greater number of buyers providing a great option for those who want to enjoy a second home without the full-time commitment.
What Basic Benefits might my Fractional Ownership Company offer?
Anyone that has ever owned a second home will appreciate how organized these companies appear to be.
Wondering who will care for the property?
They’ve included this into your ownership.
But what about Maintenance you might ask?
This is also included into your new ownership maintenance fee.
Have questions as to how you might use your luxury property you bargained for.
You will understand how and when you might use Weeks prior to your purchase.
What about possibly renting them if we can’t use all our weeks?
Their management company will handle that for you, renting your unused weeks and taking a percentage of your rental amount.
Will I be stuck vacationing in the same place year after year?
There most likely will be an exchange system associated with your purchase so that you can become a true globe trotter.
Will we be able to sell our share if need be?
Yes, any developer worth his salt will explain how you can sell your shares when needed/wanted.Be sure to inquire about all amenities within the property and how you might use them.
How to decide if fractional ownership is right for you
First rule is to love, love, love your “home location” then inquire about all the above options and are all or some included in your purchase.
When considering fractional ownership, there are other things to keep in mind. You want to make sure that you’re comfortable sharing ownership of a property with other people even though you will likely never, ever meet any of them.
You’ll also want to be aware of the costs associated (maintenance fees) with fractional ownership and what “exactly” do they cover? Review the rules and regulations that apply.
Ultimately, fractional ownership can be a great way to own a vacation home, but it’s important to do your research and make sure it’s the right fit for you & yours.
Who’s behind the Fractional Luxury Home Real Estate Boom?
Many retirees are seeing their investment portfolios — and their corresponding net worth diminish with higher interest rates, driving an increased interest in fractional ownership as price-points look inviting regarding vacation properties.
But many of the reasons behind fractional ownership’s rising popularity are more practical. Let’s face it-full ownership of a second home requires full-time maintenance — on top of what’s already required for the owner’s primary residence. Fractional ownership removes that hassle.
Another disadvantage of second-home ownership involves the cost vs. usage factor. When you fully own a second home, you are obligated to 100% of the cost, no matter how much you use the home. As a result, many second homes go largely underused — while costing the owner full price.
Finally, fractional ownership offers owners unmatched flexibility. Because they decide their own preferred usage and share of ownership, fractional owners can match their ownership choices to their lifestyle.
Whether you’re looking for a place to vacation with your family or a more affordable way to invest in a second home, fractional ownership may be the right option for you.
To review my up-to-date listing of which companies are offering Fractional Real Estate click here Fractional Business