Fractional Real Estate Ownership: Getting a Slice of a Vacation Home.
A new breed of vacation home ownership is gaining steam that allows individuals to share ownership of a property.
Think of it like this: A whole pie may look delicious, but it doesn’t make financial sense to buy the entire dessert if you are just having a few bites.
However, if you split the cost among several buyers and ensure that everyone gets a slice, then the purchase makes sense.
That’s the theory behind fractional real estate ownership, in which second homes are purchased under a multi-owner structure and cost and access to the home is shared.
“It allows you to create a connection between the time you spend in the home and the amount of money you pay for it,” says Hennie de Clerk, partner at Bush Lodge Properties. “It causes fewer headaches, costs less money and I still get everything I want.”
The concept of fractional ownership may sound similar to a timeshare, however, fractionals have fewer buyers which increases the amount of time available to each buyer and tend to be an option at more upscale destinations.
According to De Clerk, “the meaningful differences between most old-fashioned timeshares and most modern fractional ownership arrangements are the extent to which each participant’s rights and responsibilities are limited to a particular home or group of homes, and the extent of each participant’s ownership and control.
The concept is reserved for expensive homes in vacation destinations, single-family homes make up a small, but up and coming, part of the market.
Bush Lodge Properties has pioneered the concept of Fractional ownership in the Mabalingwe Nature reserve and currently offers a range of properties from a five-bedroom home at the sought after Zebula Country Club and Spa to a four-bedroom Lodge in the Mabalingwe Nature Reserve.
The fractional ownership structure is not ideal for every vacation homebuyer. Miranda Van Beek, co-partner at Bush Lodge Properties says this type of ownership only makes sense with certain vacation and lifestyle goals.
“The biggest thing is how you plan to use the home. If you are only popping down on weekends once in a while, then fractional residence makes sense. If you want to spend a whole summer here, it won’t work,” she says.
When buyers approach Bush Lodge Properties, management begins the courting process with a “fit” conversation to see if the concept will meet the buyer’s goals. “We tell people, ‘don’t do this if you are not in it for a seven-year hold,” says De Clerk.
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