Country Vacations & Resorts

Fractional ownership is actually a legal structure that allows individuals to buy properties in 1/4th, 1/6th or 1/8th shares. Real time this means you own and control the property for 3 months, 2 months, or 1 and one-half months per year. This dramatically reduces prospective buyer’s initial purchase cost and shares with others the ongoing holding and maintenance costs.

Unlike timeshares, which allocate usage time, fractional ownership gives real estate title to the purchasers via a holding company owned by the individual purchasers. This gives the fractional purchasers all the benefits of owning a property abroad, fantastic holidays for them and their family, capital appreciation and rental incomes, but insulates them against many of the downsides such as prohibitive purchase prices and high maintenance costs. Fractional ownership also removes the concern that the property is not earning money when empty. Because of this type of ownership, the property will never sit vacant while costs mount.

Financing a vacation or second-home property can be a bit tricky. If rental income is to be applied as stated revenue to help you qualify, it has to have a solid history and be well-documented. A mortgage of no more than 70% of the property’s value is fairly standard. Fractional property ownership could mean that 30% down amount is actually all you pay for your piece of this property pie. This shift in thinking from full ownership to fractional may also mean that instead of a 1 bedroom condo in France, you can purchase and become part-owner of a 4 bedroom villa instead.

Most if not all fractional properties come fully furnished and with a management company in place. This management will include the cleaning, maintenance, inventory and where applicable, rental of any weeks either you or friends and family are not using. Considering the sometimes high Homeowner Association (HOA) Fees – specifically on property you own overseas, management and maintenance costs for a fractional property will likely be lower – and will still be shared with those owning the other “fractions” of the property.

Calendars used for defining and selecting fractional ownership are often based mainly on the type and location of the property. Ski and beach locations have a specific “season” as do properties known for special interest or, traditional holiday venues.

Fractions Abroad has a very comprehensive web site and a very handy Buyer’s Guide. Since this is relatively new to me, I’m off to do more research and to check out some very interesting properties listed there. More soon…and maybe a fractional ownership “Dream Property of the Day.”