Fractional ownership may sound like some sort of algebraic
problem, but it actually may serve as a solution for the person looking for something like a timeshare -- but at a significantly
lower cost.
Although this buying option is not prevalent on the First Coast today, potential home buyers, who
would like to live on a waterfront property and are slowly being priced out of that opportunity, might give it a look -- and
especially those who want to buy into a summer get-away or mountain retreat.
"I can see this
type of arrangement working in more affluent areas like Amelia Island," said Phil Pierce, broker with Prudential Network Realty.
"Up to this point, fractional purchases are more apt to be done in exclusive resorts like those in Vail, Colorado."
Fractional ownership, sometimes referred to as shared
ownership, is not an especially new concept. Unlike timeshares or vacation clubs that require people to buy memberships and
pay dues, a fractional-ownership arrangement involves having two or more buyers or investors who come together to purchase
a property.
For years, fractional ownership has been used by pilots
to purchase aircraft, by boat owners to buy yachts and for other commodities that people want but don't need access to all
the time.
As resort real estate prices escalate and consumers
seek a steppingstone to the perfect holiday home in the sun (which sounds like it could apply to properties on the Intracoastal
Waterway and at the Beaches), this type of purchase is gaining momentum in certain areas around the country.
According to Ragatz Associates, a market research
and consulting firm that specializes in shared-ownership real estate, there were $625 million in completed fractional sales
in 2004, compared to $373 million the previous year -- an increase of nearly 68 percent.
"With the accelerating pace of market prices for ocean
and waterfront properties, it is getting harder for the majority of buyers to purchase in these areas," said Phyllis Staines,
broker associate and Realtor for RE/MAX Coastal Real Estate. "If your available financing isn't sufficient, partnerships or
fractional ownership may provide an answer in certain cases."
Unlike in a partnership, a fractional arrangement
usually means ownership is divided into fourths, eighths or 13ths -- with each owner having an equal number of days a year
to use the unit. In some cases, mostly with resort properties, owners buy their shares from a management company, which handles
maintenance and the scheduling of everyone's time.
"I know an out-of-towner who has a sister who lives
in east Jacksonville and a brother in Mandarin and he visits them a few months out of the year, but no apartments or condos
offer short-term ownership like that," Staines said. "In his case, some kind of fractional ownership would be a perfect solution."
Fractional ownership may sound a lot like a timeshare
because there are some similarities. The more fractions that are sold, the more it resembles a timeshare. Both can be bought
as deeded properties, can be rented out, shared with family and friends, sold or even left to someone in a will.
The big differences between time shares and fractional
ownership properties are prices, financing and fees. While timeshares can be had for a few thousand dollars, fractional ownerships
can run $100,000 or more.
However, with a timeshare you may pay more than five
times what the property is worth, and no one notices because the price is split up among so many people. With fractional ownership
you pay what the going rate of the property is worth, and when the property does appreciate, the money is split up among the
group evenly.
All information deemed reliable but not guaranteed. 
