Timeshares Vs. Fractionals
Many people own timeshare properties all over the world. Timeshares allow a person to say he "owns" property that he otherwise could not afford without the timeshare concept. The timeshare industry has evolved. In addition to purchasing vacation property, you can purchase other types of property using a similar concept called "fractional" ownership.
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Timeshares
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A timeshare is property that a group of people jointly own or lease, and those people take turns using the property for predetermined amounts of time. For example, if you have a timeshare property in Aspen with 13 other people, you and 12 other people will each have a four week time slot to vacation at the Aspen property throughout the year. If you own a time share, you share the time in the property, you share the cost of the property and you share any equity the property gains. The potential equity you gain is an advantage to timeshare. A disadvantage to timeshare is that you cannot vacation at your timeshare property any time; you can only use your property at your assigned time period.
Fractional Ownership
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Fractional ownership is joint ownership of luxury property, such as real estate, jets, yachts, art, racehorses, vineyards, expensive fashion items and classic cars, FractionalLife.com reports. The main advantage of fractional ownership is that people are able to use expensive items for a portion of the year by paying only a portion of the price. The major disadvantage is that consumers who use handbags, cars and other such property for only a portion of the year are sharing these items with several other owners, which means the items can be damaged by the other owners; each owner can feel like the item is not her personal property because she is sharing it with several strangers. Lucy Denyer, of London's "The Sunday Times" recommends fractional owners of the same item should have similar situations and similar values. While Denyer's recommendation may help, it may not always be possible because the fractional owner does not necessarily have a choice as to whom she co-owns with.
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Similarities
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Both timeshare and fractional ownership involve joint ownership of property. The consumer enjoys a luxury that he otherwise may not be able to afford. In addition, contracts are involved in both timeshare and fractional ownership, and the terms of the contract specify the time period for which the individual owner may use the property. Finally, both timeshare and fractional ownership are organized though a third party, such as an agent or a company specializing in these types of transactions.
Differences
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While a timeshare only allows for joint ownership of real estate, fractional ownership allows for joint ownership of cars, boats and many other types of property. When a person buys a timeshare, usually one of her goals is to gain on an investment. When a person buys fractional ownership, depending on the item she "owns," her goal may not be to gain equity because the majority of the property you can have fractional ownership in is depreciating property.
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References
- Photo Credit art image by peter Hires Images from Fotolia.com
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Comments
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Sophie Garrett
Mar 01, 2011
Fractional ownership means that a groups of private individuals have got together to buy an asset: this could be real estate, but also boats, cars, mobile homes and aircraft are commonly joint owned. These owners could be friends or family, or strangers using service like yours2share (which I run). They could also be strangers put together by commercial agents selling properties, boats etc. In the latter case, the sharers usually pay a small premium. As explained above, once the number of sharers goes above 13, which translates to less than four weeks a year, the scheme is considered to be timeshare. Some fractional ownership developments also have management and maintenance fees: in others this is entirely up the owners. Many timeshare and commercial fractional ownership developments have systems to let unused weeks or allow owners to swap their weeks. -
Sophie Garrett
Mar 01, 2011
I'm afraid much of this article is incorrect. Timeshare means buying the right to use a property for a lengthy period, usually 20-30 years, where the "rental" payment is made at the beginning. Timeshare also includes schemes where the purchaser is buying equity, but for three weeks a year or less. Timeshares usually incur a sizeable annual management fee. All timeshare schemes are carefully regulated. This is because the buyers need to be sure that the development will be suitably managed and maintained over the life of their purchase. The regulations also protect people against some of the poor selling techniques that gave timeshare such a bad name. Although timeshares are generally for property (real estate) the concept can easily be applied to other assets such as boats and the recent update to the European laws on timeshare specifically includes reference to other asset...
