In today's volatile market environment, new investors are quite concerned with how they plan on saving for the future. Mutual funds are no longer as safe as they once were. One direction some are taking is in the real estate market. Several countries have seen their real estate markets booming. Even despite the subprime credit crisis that is affecting the U.S many global real estate markets are expecting growth. The average investor may not be able to afford a second home, which is why some are looking to fractional ownership as the answer.
Many are familiar with the concept of timeshare born out of the United States. An individual purchases a certain amount of time with which they can use the timeshare. Usually in periods ranging from one to two weeks. Many Britains are beginning to adopt a similar investment strategy called fractional ownership. The investor buys a fraction of a property. Fractional ownership usually spans from 4 to 12 weeks out of the year. During this time, investors can either enjoy the property or rent it out as a way of helping to cover service fees. The major difference between fractional ownership and time sharing is the fact that investors have a genuine stake in the property. This means that investors can benefit from any capital gains should the property be sold.
One of the drawbacks that fractional ownership shares with time sharing is the fact that full ownership is almost impossible without buying out the other owners. So there is no full control over the property. In most cases the assigned time in which each owner will occupy the property rotates from year to year. So depending on the location it is very possible to end up with the rainy or dry season. This could affect potential rental income during those months. Ultimately though fractional ownership could prove to be a new direction in long term investing.
