So, what is fractional
ownership, what makes it different, and is it for you?
First, let’s answer a
few basic questions about fractional ownership.
Fractional
ownership FAQs:
How
does fractional ownership work?
In fractional ownership, you own a
share of the real estate itself and are issued a deed for
the
Property, not a time that
you can use the home. This keeps the costs lower than whole
ownership, but you still have access to the home if you are
satisfied with the sharing model.
Is
fractional ownership a good investment?
Compared to Traditional Real Estate
, Yes. With fractional ownership, your share of the
real estate rises as the value of
the home rises with the market, just like whole ownership
at a very low risk and management cost.
Traditional Real estate have a very
unorganized secondary buying market whereby someone
is buying the home from the Agent
not directly from the owners,at many times more then one
agent involve which add up to the
total deal price and make it tough to sell. rather, in a
fractional ownership seller has
a its own community of co-owners through which he can
directly sell his share to them conveniently and hassle
free.
Can
you get a mortgage for fractional ownership?
Yes and no. As it’s still not a
widespread financial product, you’ll have to seek out banks
that offer mortgages for fractional
ownership, as it’s not likely regional or smaller banks
would have the systems in place to offer such a loan.
However, they are out there.
Fractional
Ownership: Pros and Cons
Just like its traditional real
estate and vacation rental predecessors, there are of course
some drawbacks to fractional
ownership. Here are a few of the most pronounced
advantages and disadvantages.
Pros
It’s more affordable
It’s more affordable
Perhaps a 1crore home is out of
reach, but 10 lacs is right in your wheelhouse. Fractional
ownership lets you get the home you
want in the most desirable location at the price you can
afford. This goes for home upkeep
and maintenance, too. By sharing the costs of upkeep,
fractional ownership makes long-term ownership a much more
realistic possibility.
The
home will get some love
No home should sit vacant 48 weeks
out of the year. By sharing the ownership, the home
will be opened up at regular
intervals. Opening and closing windows and doors,
running the water, turning on the AC
and heater, using amenities like the hot tub and pool—
all of these are essential to
maintaining the home. It provides an opportunity to identify issues
early on and preserve the home’s long-term value.
Peace
of Mind
Fractional ownership also means
sharing the burden of home ownership. Rather than a single
point of failure (i.e., you), you essentially have a group that
shares accountability, schedules maintenance,
checks on the home, and divides the
work and chores that would otherwise be left to a
single owner.
But as with anything, there are downsides to fractional
ownership.
Cons
Renting
can be a tedious task
In fractional ownership, selling
isn’t as straightforward as whole ownership. While it’s by no
means as hard as daily
rentals, you’ll have to do research to check on how the ownership
is structured and what restrictions
may apply with regard to your opportunity to rent
your share.
You’re
tied into one location
In most cases, fractional ownership
is tied to one property. If you or your family likes variety,
this arrangement can be limiting.
Some properties are part of an exchange program,
allowing owners to trade their
nights for another location with equal value.
But most owners find it very
challenging to match the location with the time of year
they like to travel.
So,
what came next?
We’ve seen what happened to
Traditional Real Estate over the last 10 years, and we’ve
seen the bumpy road vacation rentals
have taken—with an uncertain future.
Now, with fractional ownership
on the rise, a new form of ownership that began in early 2020
By an innovative vacation
home investment company, has demonstrated success in offering
the best way to own and enjoy a
collection of premium vacation homes in a diversified Manner.
BRIK
itt- Real Pride of Ownership
Buying into a BRIK offers accredited
investors the chance to see returns
from traditional real estate
appreciation through a diversified portfolio of luxury residences
around the world. And just like
fractional ownership, the homes in the portfolio are yours to
use when you want and are only
available to other BRIK-Owners and then to the
General Publicor Guests.
So, you get the returns of a passive
investment vehicle, the control and peace of mind
of a Property manager, and the joy
of a vacation home, without ever actually having to
take care of it, decide how or when
to sell it, or come to a consensus with other owners.
That’s the
perfect combination for luxury vacation home ownership.
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