Fractional Ownership is something that has been around for years but has just now hit the investment real estate market ( i.e. vacation homes, townhouses, condos, etc). For years business men and women have been using the fractional ownership technique to purchase everything from private jets to expensive jewelry. Fractional ownership broken down basically means that you and a group of people (often times friends and family) pool your resources together to purchase an otherwise expensive product. This product is then split up evenly among the investors and each investor owns an equal fraction of the investment. With vacation homes that means that each investor has either one or two months to use the vacation home (the number of months depends on the number of the investors). Fractional ownership works very well for the family that wants a nice vacation home to call their own but doesnt want to spend $400,000 dollars on a place they will only use a few weeks out of the year. If you are only planning on using the vacation home one month out of the year do you really want to pay the mortgage and upkeep costs the other 11 months of the year? Now if your anything like me a big alarm is going off in your head and your thinking that fractional ownership is nothing more then a fancy way of saying timeshare. Well its true that fractional ownership vacation homes do share some similarities dont confuse the two as the same.

Here are some of the major differences between buying a fractional ownership vacation home vs. a timeshare:

1. Luxury - Fractional Timeshares are much bigger and usually a lot nicer. Timeshares tend to be small cheap cookie cutter housing pawned off to unsuspecting tourists by pushy salespeople that dont take no for an answer. Fractional ownership properties are very classy and are actually worth the combined total of the investment from each investor. This may sound a little confusing so Ill break it down for you:

Timeshare:

25 investors (each investor buys 2 weeks) x $47,000 = $1,175,000 house

Usually these timeshares are valued well below $150,000

Fractional Ownership:

12 investors (each investor buys 1 month) x $50,000 = $600,000 house

Fractional ownership houses are valued around $550,000-600,000. In fact if you compare timeshare to fractionals youll notice that per week timeshares are more expensive for less room and lower class furnishings.

2. Global Exchange - Global exchange gives you the option to exchange unused weeks at your fractional to vacation in multiple vacation spots around the world. Many timeshares offer this as well but the houses and amenities in times are typically much much lower then a fractional. If youre going to a vacation in Greece do you really want to spend it in a cramped 500 sq ft studio apartment in the bad part of town?

3. Easier Financing - Banks and lenders consider fractional ownership homes to be similar to a second home, so its usually easier to finance a fractional over a timeshare. Also, the rates are often time lower on a fractionals.

4. An Actual Investment - Fractional ownership is an actual investment unlike a time share that plummets in price as soon as you sign the paper. If you go on Ebay right now youll see hundreds of people trying to sell their timeshares for a tiny fraction of what they paid for it just a few months prior. With fractional ownership the property value increases and so does your investment (especially if you invest in preconstruction fractional ownerships)

On average a family uses its vacation or second home about 28 days a year. This is why fractional ownership has started, it was created because their truly is a market for it. Fractional ownership opens a door for the thousands of investors that want a luxury vacation home but dont want to pay hundreds of thousands for it.

For more information on Fractional Ownership vacation homes and housing visit our website: http://www.investrealestate101.com