Mortgage Rate News

One of the growing real estate trends, even as the regular housing market faces the prospect of 2 million foreclosures by 2009, is fractional ownership. Fractional real estate is growing in popularity as more people want to own a stake in vacation homes and destinations.

Here’s how fractional ownership works:

You purchase partial ownership in a property. You are deeded a portion of ownership, depending on how much time you expect to spend at the property, and how many other owners are in on it. Basically, different people share the ownership of fraction real estate.

Inman News reports on this real estate trend:

A much more intriguing way to own more than one property for the price of a single full ownership is “fractional” ownership. Fractional ownerships are different from timeshares. …

One of the most attractive aspects of fractional ownership is that a buyer could spend $500,000 and have a 20 percent share of a $2 million unit. In the ultraluxury market, a buyer may spend $1.5 million to have a 20 percent share in a $5 million luxury home program. Many of these programs provide full-time staff for their guests. This may include a full-time cook, cleaning staff and just about any other service a visitor would need.

And, if you sign up in a system that offers a variety of fractional real estate properties, it is possible for you to switch your time at one place for another. And because you own the property (as opposed to timeshares, where it is more like paying for the ability to rent it), it can build equity. So you can actually sell your fractional ownership down the road for more than you paid for it.

Fractional ownership is already big in vacation destinations like Aspen, Colorado. But it is becoming more popular in other locations, like Kapolei, Hawaii, Seattle and Sedona, Arizona.

Tags: fractional ownership, fractional real estate, home mortgage loan, mortgage blog,
real estate trends, build equity