Many people assume fractional ownership comes under the umbrella term of timeshares. However, this isn’t the case. Both are different property or asset ownership models. While they both allow “shared ownership,” and there are certain similar characteristics, there are differences well.
Let’s look at these differences.
Investment Value and Equity
In fractional ownership, buyers own part of the asset. They have a share in the equity, and as the value of the asset appreciates or depreciates, so does the owner’s equity. There is either a capital gain or capital loss on the overall investment when the owner decides to sell their share or if the entire asset is sold.
With timeshares, there is no ownership. Buyers have a time limit for using the asset. The asset is owned by the owner, and the buyer can use or occupy it for one to two weeks per year. This also means there’s no profit gained when the asset’s value increases.
In today’s housing and real estate market, owning a vacation home or property is only for the wealthy ones. Timeshare is like a vacation expense for many and not an investment. There is no return on your investment, and timeshares are simply enhancing your lifestyle and offering you a break from your daily life. Timeshare buyers are happy with their purchase.
Management and Other Fees
With fractional ownership, owners have to pay additional fees along with the purchase price. This fee covers the property’s maintenance, management, and repair expenses. It also includes housekeeping services, taxes, and insurance. This is a significant amount.
Timeshare owners also have to pay maintenance fees when they purchase a timeshare. However, the responsivity for day-to-day repairs, maintenance, and other expenses is on the owner. Owners have the ultimate control and authority.
If you go for fractional ownership, the service provided by your management company is good enough. If your property has staff, all owners are constantly in touch with them. The staff knows what the owner prefers, and the property is up to each owner’s tastes. Housekeeping in timeshares is limited.
Number of Owners
This is a significant difference between timeshares and fractional ownership. There can be up to 50 owners for a timeshare asset or property. So if you’re going for a home or apartment, if the owners are a lot, you may not get a lot of time to occupy the space.
With fractional ownership, there are up to 12 owners per property. All owners can visit frequently and stay for longer whenever they wish to. With timeshares, assets are more prone to wear and tear due to constant usage. Fractional ownership properties stay in good condition for a long time.
You can reach out to our timeshare attorneys for a timeshare cancellation.