Would you buy fractional ownership?

[oregon woodsmoke]

I'm not in the UK, so maybe my opinion isn't valueable for this survey.

I would not purchase a fractional ownership for several reasons.

The most important reason is that partnerships in real estate can be very awkward. There is inevitably at least one partner who will not carry his own weight and leaves the responsibility to the other partners. If he does not make his payments, the difference must be made up by the other owners. If he doesn't clean when his weeks are over, the next person must clean his mess.

Fractionals are always over-priced. The total of the sums is much higher than the total value of the property. I don't believe in paying more than something is worth, and in real estate, I don't even believe in paying what a property is worth. If I can't purchase ir for less than the value, it is not a good purchase.

Fractional shares are extremely difficult to re-sell. If you want to sell, the only good way to sell is to get all the owners to agree that everyone sells at once, so the property can be offered as a whole. Inevitably, there will be at least one owner who doesn't want to sell. leaving you to try to sell a partial ownership with no takers.

If you want a vaction home, buy a time share. But do not buy it from the time share company. Buy it after-market, where a $10,000 time share can be purchased for a couple of hundred dollars.

You don't need to purchase a time share in the place you want to stay in. Most time shares have exchange programs, so you can purchase a time share where ever it is cheapest, and trade your week there for the place where you want to stay.

Watch the maintenance fees, because the fees can be as much as you'd pay for a hotel for the week, meaning that there isn't much benefit to a time share, except as a place that vacuums your money out of your pocket.

[rowlandsbb]

agree, much better to own outright even it it means compromising on size and location
But I think many who do buy time share and fractional shares do this on the basis that they know it is not an investment but just for use in a location they like for a short time each year

[teepeeseller]

Fractional ownership has been successful for years in the US. It is seen as a good way to buy yourself into a property which maybe ordinarily would be out of reach.
Done through a respectable, experienced source and it is usually win/win.

However, your questions around it being a viable business proposition here in the UK lead to a slightly different conclusion.
It is here to stay and slowly may catch on here in the UK. It is something my company has considered doing through US agents (experience again) We may adopt it at some later point.

I tend to agree with Soup Dragon - co-operation with other buyers and/or better still structured syndicates is as efficient, safe and simple for the indiviual members and more acceptable to the UK psych.

Nothing wrong with trying it as an addition to your normal methods but if it is as a sole product - well.... I have my doubts.
I do believe it will gain respectability and should not be confused in any way with time share.
Hope this helps.

[jessicatam]

I did a quick survey of some friends / family about fractional ownership - the older people (40+), said it sounded like a time share, and responded very cynically when I explained that it's not really the same.

The younger ones (late 20s) seemed quite intrigued by it - one of them had actually mentioned that they'd seen something similar with limos, and were toying with the idea 'to impress the laydeez'

So, I think that it may be something on the up with younger people in the UK - the credit crunch means they can't afford to buy a whole holiday home, but they can get the same perceived benefit (access when they want a holiday, the ability to say 'My holiday home' ) with fractional ownership.

[rowlandsbb]

Just heard today about a purchaser of a 1/4 share in Portugal

apartment now needs updating and is starting to look a touch shabby...problem they have is that two of the 1/4 share owners are not interested in upgrading

So the outcome is nothing is done!!
They now want to sell......no established market in Portugal or EU yet and the market is flat...but the main problem they will have is that any buyer will want an upgrade!!!!

Just one of many problems with 1/4 share...perhaps not as good as a time share!!!

And in many cases for, the price you pay for a 1/4 share in good locations in Portugal, you can get your own property in nice parts of Spain!!!

the sun is the same and perhaps the food and wine in Spain is a touch better

[Toby Pocock]

With fractional ownership property you need to consider all the basics of the property in whole ownership form. Price, location, ability to finance through mortgage / rentals etc. With fractional there are more considerations including what the sum of the total fractions add up to. If it is significantly more than the whole ownership price you need to consider if it will hold its value in shared format.

There is a much more information on this at Fraction Direct. com - or you can email the office with your details and I shall contact you to be of more assistance

[hmilesjr]

The problem we have seen locally here is that middle case families who are strapped for cash purchased luxury homes on a fractional basis only to find out they could not keep up with their part of the taxes, insurance, and maintenance.

[rowlandsbb]

As the EU economy goes further into recession so will the probelms associated with fractional share as it is always the marginal products which are more affected
Sounds OK when everything is going well but when belts are tightened the buyers look for better value for the spend they have available
So buying 100% of a smaller property becomes even better value and you control your own running costs.... say a 1 bed GF apartment in a nice location in Spain for circa 99.000 € or a 2 bed maisonette from say circa 119.800 € is more attractive and long term a better buy....sun is the same !