Many of the questions I get on what seems like an almost daily basis involves fractional financing. Why wouldn’t they? It is rare indeed, the individual that purchases real estate with all cash (though giving the current lending situation, this may be happening more and more for people with the means). The fact of the matter is that fractional financing for single family fractional homes has all but dried up. It’s just a sad reality of the current market.

So, here’s a thought for now I’ll call the “One Fifth Solution”…

Let’s talk about an average second home buyer who wants to buy a vacation home. In the past, and even more so today, second home buyers need to put up a large down payment due to the fact that the home is not acting as a primary residence and therefore is slightly riskier for the banker. So, that said, let’s say for a decent interest rate, 20% down is needed…This is 1/5^th of the asking price.

You can probably already see where I’m going with this… if a family can buy a whole ownership home for 1/5^th down and then take on monthly payments for the balance – wouldn’t a 1/5^th fractional ownership home with ZERO debt be a better option?

It sure makes a lot of sense when you stop and think about it… Same initial outlay (in cash), use the home for 10 weeks a year (more than most people use their vacations home now), save 80% on the expenses every month… and best of all NO DEBT.

It is even better when a slightly smaller fraction is considered like a 1/6^th or 1/8^th assuming the owner is comfortable with the amount of time allocated to their ownership share of 8 weeks or 6 weeks respectively.

It doesn’t matter how much money you have – simple value for your dollar wins every time. The “One Fifth Solution” is just another way to achieve that value.