What is fractional ownership?

Fractional Ownership, or Shared Ownership, in real estate is a rapidly growing alternative to Whole Ownership in real estate, designed so that each owner is deeded a specific interest (fraction) of a specific residence (condominium). Fractional ownership is a deeded property with the same rights as any other real estate purchase. Each co-owner owns a percentage of the property and is shown on the title and deed as an owner. It works very well for the family or individual that wants a vacation home or real estate investment, but does not want to spend $400,000 or more on a 2nd home they will only use a few weeks out of the year.

How is fractional ownership different than timeshare ownership?

The difference between most old-fashioned timeshares and most modern fractional ownership is the extent of ownership and control given the users of the property. Old-fashioned timeshares typically do not involve direct ownership of real estate, meaning that the users of the property do not actually own or control it. Modern fractional ownership involves direct ownership, meaning that each user has a deeded interest, and this means greater owner control. For example, a fraction can be mortgaged, sold, rented, or even willed to a friend or family member. Also, fractional deeded ownership in real estate historically has the same appreciation rate as whole ownership, whereas old-fashioned timeshares currently resell for an average of 50% of their initial cost.

Is fractional ownership for me?

Although everyone dreams of owning a 2nd home/vacation property, most can’t afford the type of property they want, or they deduce that they would not use the 2nd home enough to justify the added expense. Fractional ownership does provide a solution to these problems by allowing the purchaser to pay only a fraction of the costs and ongoing expenses of a 2nd home, and share the unforeseen maintenance issues and economic changes with others. Also, due to the amount of time available to a fractional owner, there is less of a need to keep a unit constantly rented as compared with whole ownership. To summarize, a fractional purchaser has a Lower Purchase Price, Lower Operating Costs, and a Lower need for Rental Tenants.

Why it is the fastest growing form of real estate ownership?

  • The 76 million Baby-boomers, which account for 1/3rd of the U.S. population, has dominated consumer demand for all products in every stage of its lifecycle, and is now dramatically affecting demand for second home real estate.*

  • The second home market has accounted for nearly 40% of all new home sales since 2004, that according to the National Association of Realtors.

  • 2nd homes provide investment diversification, which has become a critical concern of consumers since the stock market crash in 2000 and 2001.

  • Two thirds of the 2nd home owners spend four weeks a year or less in their home, thus making second home ownership impractical for about 80% of the households in the U.S. earning $150,000 per year or more.*

  • In response to demand, the resort industry has undergone substantial change in the last 5 years. In order to broaden the market, new products have been invented to better respond to people’s needs and pocketbooks.

  • Fractional Buyer’s benefit by buying at a much lower price point for a luxury resort condominium than what they typically may be able to afford, and/or they are buying what they only have time to use.

  • Industry Size – 170 fractional interest resorts have been identified as of March 2005, an increase from 151 in 2004 and 138 in 2003.**

  • Fractional interest sales totaled $1,075 million worldwide during 2004. Including $31.5 million of re-sales and $436.7 million of presales were generated in 2004 for a grand total of over $1.5 billion.**

  • Consumer Recognition – Half of U.S. households with an annual income of $150,000 or more have been introduced to the concept of fractional ownership.**

  • Average Price of a Fractional Interest was $221,600 in 2004, up from $207,800 in 2003.**

  • 93% of Fractional Owners tend to be satisfied with their purchase!**

* Hobson Real Estate Advisors ** Ragatz Associates
NOTE: all associate members of Eden in BELIZE may within one year transfer 100% of their investment in a fractional to a WHOLE condo/villa/luxury home ownership and have the best of both worlds.

ALL associate members may trade within the association: Example send 2 weeks inland in the jungle/mountains near San Ignacio and 2 weeks on the sea.