The Difference Between Fractional Ownership and Timeshare
Let’s bust a common myth.
Many people believe that fractional property ownership and timeshares are exactly the same thing. However, this is not true.
Of course, these types of real estate investments are similar. They both involve sharing ownership of the vacation property rather than owning the entire home outright. However, that’s the point where the similarities end. When you look at the details, these options are quite different.
Let’s take a look into the similarities and differences of timeshares and fractional ownership, so you can have a deeper understanding when you are weighing up your options.
What is Fractional Ownership?
Fractional ownership is when several different parties share in the ownership of a real estate property. The title or deed is legally divided into shares or parts and you can own as many or as few parts as you choose.
Partbnb is an example of Fractional Ownership. When you sign up with Partbnb, you’ll be able to buy a share in one of the beautiful Caribbean vacation homes available. There are 8 shares in each home and you can select to buy one or more of these. You’ll have an account manager who will keep you informed of the timeframes and the process of completing your purchase. (This includes providing the necessary documentation to the local government authorities.)
Partbnb then forms a local company to hold the property, with each of the owners holding their own relevant interest. Your fractional ownership involvement can be tracked on the easy-to-use Partbnb dashboard. Plus, you’ll be able to book in the dates when you can use the property.
You’ll be able to place your part of the property up for resale at any time after a period of 12 months ownership. That way, you aren’t locked into a long term commitment and have the choice to sell your part at any time you choose.
What is a Timeshare?
At one point or another, we've all been invited for a "free" getaway in exchange for listening to a timeshare presentation. On the surface, the pitch sounds similar to how fractional ownership works. Rather than paying the full price for a vacation home you’ll only visit once per year, you can share the expense with others and agree on a time for everyone to use it.
After all, that’s why it’s called a "timeshare." You are purchasing a "share" of "time" at a resort. This is an important distinction - because you aren’t actually buying anything tangible other than the right to stay in the property. Usually these timeshares are divided into 1-2 week periods, but if a buyer desires a longer time period they might have the opportunity to purchase several consecutive timeshares.
Main Differences Between The Two
So, although fractional ownership and timeshares have similarities, there are certain differences between the two. Here are some of the main distinctions.
- Number of Owners
Sometimes timeshares will have as many as 20-50 owners per unit. Often, timeshare owners will only be able to visit their property once or twice per year. One of the main disadvantages of this is the added wear and tear that comes with this higher traffic. Usually timeshare owners will need to pay maintenance fees which are used for upgrades and revisions.
In contrast, with fractional ownership with Partbnb, there will only be 8 owners per property. This will give you a much greater stake in how the property looks and feels and how it is managed.
- Size and Value of Property
In general, the types of properties you can buy with fractional ownership are larger and higher quality, with better finishes and more amenities. These higher quality properties also often have better management and maintenance, which allows them to look great and operate smoothly over time.
In contrast, many timeshare properties degrade over time and are subject to more wear and wear. It’s easier for them to suffer from issues of inadequate maintenance and higher traffic.
- Length of Use
Because fractional ownership often includes fewer owners, they will have more time every year to use their property. In contrast, with a timeshare you’ll likely only have one week per year to use your property.
With fractional ownership, you may have as many as three to 12 weeks to use the property. Since there are fewer owners, the property will experience less wear and tear.
- Ability to Re-Sell
Timeshares are notoriously difficult to re-sell. Not many people are interested in building a timeshare, because it loses value so quickly.
On the other hand, fractional ownership in a property is easier to resell. This is because it is closer to actual real estate. For example, with Partbnb you’ll be able to resell your part at any point after you’ve owned it for at least 12 months. Partbnb can also arrange for a local real estate agent to list and sell the property at or above the most recent valuation.
- Distribution of Equity
Another major difference is the distribution of equity. With fractional ownership, you’ll actually own partial equity in the property. This means that if the property increases in value over time, you’ll be able to enjoy the advantage of this.
In contrast, with a timeshare you’re only buying a week or two per year to spend in a property. There’s no way to benefit from a change in value of the actual property itself.
Fractional Ownership Vs. Timeshare
These are some of the main contrasts between timeshares and fractional ownership. Although they might seem similar on the surface, they are really quite different. Make sure you take the time to distinguish which type of offer you are getting into - so you know what to expect. Ask yourself what your goals are for the investment and what’s most important to you.
Interested in learning more about the features and benefits of Partbnb fractional ownership?
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