Recently, more people than ever have been buying shared vacation homes, sometimes through arranged schemes, and sometimes through their own informal agreements amongst friends and family..

For many this type of arrangement works really well, and they have been able to achieve the dream of owning a vacation home much more quickly. However, it is important to make sure that you are clear on the expectations, and to check with yourself if this is the right option. We know from our discussions with owners that sharing doesn’t necessarily suit everyone, so we’ve written this article to help you with that decision.

What is shared ownership

Simply, shared ownership is about taking an item (in this case a vacation home) and splitting up the purchase and holding of that item between a number of people. Usually this involves forming a company structure to administer the item, and to make clear the ownership interests.

In most cases the shared ownership covers all aspects of the property including any income (money earned from renting out the property to other people), and any expenses (money paid to cover the running costs of the property). When it comes time to sell, a persons interest / share of the property might be sold, or the entire property might be sold and the proceeds split between each person.

Shared ownership is not a fundamentally new concept, and has been around for many years. In many cases these have been setup informally between friends or family, and are then managed by one of the owners.

Most people are familiar with timeshare concepts, and whilst these have some similarities to shared ownership, they are usually a bad deal for an owner as they often come with no actual titled ownership of the property, fixed usage restrictions, high maintenance fees, and zero share of income when you don’t use it. Most are managed by large corporations which make significant profits from these arrangements.

Is shared ownership the right fit

We’ve prepared the following questions for you to ask yourself. This will help you to work through whether this option might be a good fit for your situation.

• Have you saved up an appropriate amount to afford a share of a property? As you will need to pay in cash, depending on the property value this could be say $80k to $200k
• How often would you anticipate using the property for?  If for example the property is split between 8 owners, you would get around 6.5 weeks per year. Is that enough usage? 
  
• Do you have some flexibility on when you might want to use the property? If you have a very specific time period you must use the property every year you may find that sharing becomes difficult if you are unable to book the dates you want.
  
• Are you happy to have other owners using the property when you’re not there? In a shared ownership setup, other owners and potentially rental guests will use the property when you don’t.
  
• Are you a handy person, or would you rather someone else took care of that? In a shared ownership arrangement, there is usually a property manager who will arrange for all aspects to be taken care of on behalf of the owners.
  

Weigh up the pros and cons

Its important to consider some of the pros and cons of shared ownership, so we have listed the ones that we are aware of in the table below.

Pros

• Lower cost of acquisition
  Of course, one of the biggest and most obvious advantages of shared vacation home ownership is the lower initial cost. Instead of having to invest the cost of a full property, you’ll only need to pay a fraction. Additionally, any costs associated with renovating and outfitting the property will also be split.
  
• Reduced ongoing operating costs
  When you own a property, there will also be ongoing operating costs such as property tax, insurance, maintenance, utilities and much more. Shared Ownership allows you to split those costs amongst all owners.
  
• Reduced ongoing operating costs
  When you own a property, there will also be ongoing operating costs such as property tax, insurance, maintenance, utilities and much more. Shared Ownership allows you to split those costs amongst all owners.
  
• Possibility of rental income
  If the property is managed it is possible to rent it out short term utilising sites such as Airbnb, HomeAway, VRBO, Expedia to provide an income. This can be done when owners are not utilising the property. 
  
• No maintenance responsibility
  If the property is managed all aspects of maintenance are taken care of meaning that owners are able to simply book and utilise the property without worry.
  
• No requirement for a Mortgage
  In many cases the dream of a Vacation home will entail a large loan from a lender. This can be complicated to arrange, especially in destinations such as the Caribbean. 

Cons

• Not exclusive use
  You have to share the property, this means that you may not always be able to book the exact dates you want, and some compromise may be needed. 
  
• No leverage for investment purposes
  One of the upsides of shared ownership is no mortgage / lending is needed on the property. However, for some individuals this higher risk leveraged investment option is important and so the lack of this could be viewed as a downside.
  

What we offer at Partbnb

If you have read the above and the concept of shared ownership sounds like a good fit for you, then you should consider talking to us about our options. We are here to bring together those interested in shared ownership by offering potential properties, arranging the details, and then facilitating the acquisition and ongoing management of these properties.

Be sure to create an account to view available properties, and stay up to date with any upcoming opportunities.