Is Fractional Home Ownership A Smart Investment For 2023?

Investing in real estate grants us the opportunity to grow massive wealth. However, traditional means of real estate investing just aren’t for everybody.

Down payments alone are already a huge barrier to entry. So, are there any real estate investment strategies that don’t require you to shell out big capital?

Well, yes! You can do this through investments such as  REITs or ETFs. But another real estate investment is gaining popularity fast—Fractional Home Ownership. 

What is Fractional Home Ownership?

Millennials are struggling to buy homes. According to statistics, only 38.5% of people aged 35 and below are homeowners. The alternative to owning a home? Fractional home ownership! 

fractional real estate investing

Source: Unsplash

It’s a method of buying a portion of a property with others investors. Each one gets a slice or a portion of the property. You often see this for holiday apartments, resorts, and vacation homes. 

Fractional real estate ownership allows access to these properties for five weeks or more every year. Each owner has an equal part of the property and can have a say in how it’s managed. 

As you can see, it has lots of similarities to timeshares. But it has several key differences. Here are some examples of the differences between fractional ownership vs timeshares:

Types of Fractional Home Ownership

There are several types or categories of fractional home ownership. Some might fit better for your situation while others don’t. To help you with the research process, here are the most popular types of fractional home ownership you can encounter:

But both equity and non-equity clubs will provide owners with an exit strategy following a pre-set number of years of participation. 

Fractional Home Ownership: Pros and Cons

fractional home co-ownership

Source: Unsplash

To help you figure out if fractional ownership is a good investment for you, we’ve listed down some key pros and cons:

Fractional Home Ownership Pros

One of the most sought-after benefits of fractional home ownership is its affordability. It also gives investors fewer risks, and the opportunity to invest in luxury properties affordably. 

Here’s a more in-depth look at the benefits:

Fractional Home Ownership Cons

Every investment has its own downsides and opportunity costs. One of the main ones you’d find in fractional home ownership is the lack of control and difficulty in selling shares. 

Key Takeaways

Fractional homeownership is a great way to invest in luxury real estate without a massive barrier to entry. It’s affordable, helps you diversify risks, and generates a steady income. To recap, here are some key details you might’ve missed:

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