Fractional Ownership vs Timeshares
Fractional ownership is a smart investing move.
However, many people still confuse fractional ownership with timeshares. After all, they are both types of “shared ownership” and they have some similar characteristics.
Unfortunately, due to the negative perception of timeshares, many people are skeptical of fractional ownership and concerned that it might be a scam.
The truth is, these types of investments are very different and many of the criticisms of timeshares simply don’t apply to fractional ownership. There are disadvantages to owning a timeshare that isn’t a problem when it comes to buying a fractional share in a property.
Let’s define what timeshares and fractional ownership are all about, so you can see the important distinctions.
What is a Timeshare?
The clue to how this type of investment works is in the name. When you buy into a timeshare, you purchase a “share” of “time” at a vacation property or resort.
Rather than purchasing a vacation home, you’ll be paying to visit for a specific time each year. You may also pay annual maintenance fees rather than a mortgage, which helps to keep the property up to date and running smoothly.
That means that you own “time” at the property, but you don’t actually own any form of real estate property itself. You simply have the right to occupy the property for a set amount of weeks per year, but the title remains with the principal owner.
Many timeshares are shared between groups of up to 50 people, which means that your “share” is only one week per year. Some timeshare programs might also have a points system which allows members to collect points and “spend” them at different resorts or properties in other locations.
One of the main problems with timeshares is that the purchase price is often inflated so aggressively that it is difficult to recover your initial investment. Timeshares can be priced at 3-10 times the actual value of the underlying real estate, which will force you to pay a premium for a property that isn’t worth that amount.
Also, very few timeshares increase in value (and even if they did, the investor wouldn’t be able to make any capital gains on that value.) One of the issues is that timeshare buyers are considered yearly guests, rather than property owners. As a result, the project developer has very little motivation to maintain the property to high standards once the project has been fully sold out. This makes re-selling timeshares very difficult.
With this in mind, timeshares can be considered a vacation expense - but not a financial investment.
What is Fractional Ownership?
Fractional ownership is very different than a timeshare.
With this type of investment, you’ll actually own the real estate itself. It’s just like owning a vacation home, but instead of buying the full property you will be buying a small portion of it. (In some cases, such as with Partbnb, part owners will also be able to book and stay at the property at a discounted rate.)
This offers a lot of advantages, as it allows investors to buy part of a property even if they don’t have enough to put up the cash for the entire asset outright. Also, investors are usually not responsible for maintenance expenses, taxes and other expenses. Fractional ownership options tend to be at higher caliber properties and they offer longer usage time, as they aren’t split between as many people.
When you own a timeshare you only own time spent visiting the property. There’s no way that time can rise and fall in value with the home - so it’s very difficult to make a profit. Investing in fractional ownership and buying a piece of equity in the property means that if the vacation home goes up in value, your share becomes more valuable.
You’ll have the option to sell the asset and receive capital gains. As with whole ownership of a property, you can sell your share anytime you’d like. That’s why many lending institutions consider fractional ownership a much better investment than a timeshare - and they are likely to be more willing to finance a purchase.
That’s why Partbnb offers fractional ownership, not a timeshare.
Our investors receive a share of income and they are able to sell those parts on our platform to realize property gains. This makes Partbnb nothing like a timeshare. Owning a fraction of a property resembles full ownership of vacation real estate, much more than it resembles a timeshare.
In addition, Partbnb offers another advantage. Our team prepares the property to be listed as a Short Term vacation rental. We create the listing on Airbnb, VRBO and other online vacation platforms. Then our vacation property management company, KeyLobby, uses their expertise to maximize to ensure an optimum rate, high occupancy, and steady earnings.
Every month, we compile the income and expenses for the property and you’ll receive your share directly into your digital wallet. You can either choose to withdraw those funds or reinvest them into other properties. This potential for ongoing monthly income is something that a timeshare simply cannot offer.
To sum up the main difference between these two options:
With timeshares, you are buying the right to use a property.
With fractional ownership you are buying real estate.
Get Your Slice of Paradise
If you want to learn more about fractional ownership and how Partbnb can help you earn returns with your investment, go ahead and click here : https://www.partbnb.com/#/app/how.
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