Fractional ownership is a new concept to many people. It has some of the same characteristics as 'timeshare' but just like a minivan has some similar characteristics as a sports coup – they really are two different animals. Below I’m going to list just three of my favorite reasons to own a fractional. These are not ALL of the reasons a person should consider fractional ownership, these are just three.

Leverage: When most people buy a home in the traditional manner, they use one type of leverage: bank debt. They borrow money and then repay it over a certain period of time. When you buy a fractional on the other hand, you are using a different type of leverage. Call it “other people’s money” where “other people” are co-owners in the property.

In this scenario, you can actually create a situation where you are putting down the same amount of money as a bank loan (20% for example) but with fractional ownership you don’t need to make payments on the other 80%. You simply give up ownership of that 80% and let other people use the asset. Call it “new financing” or “people funding” or whatever catchy name you can think of, I just call it: smart.

Good for the Environment (aka “green”): You have people that recycle and people that don’t. I for one do recycle, because I can’t stand knowing that all my plastic trash is going to the dump to be buried underground. That said, I wouldn’t consider myself “green” by any stretch of the imagination though.

When it comes to fractional ownership, there is an interesting “green” angle to consider… When you are a co-owner on a home, that means that at least one more home doesn’t need to be built. If you are one of six co-owners for example, FIVE homes now do not need to be built. That means less trees are cut down, five less lots need to be cleared and five less refrigerators need to be purchased. Sure from a strictly economic perspective this probably isn’t a good thing but from a “green” perspective it is a great thing. Not only that, but with fractional ownership there is more supply in exclusive areas so prices don’t have to keep people out who want to own a vacation home (think Vail, Lake Tahoe, etc).

Diversification: Finally there is good ol’ diversification. We all know what diversification is when it comes to stocks and mutual funds, but doing it with real estate is not as common because it is costly. Not only do you need to purchase separate homes, but there is the annual upkeep, taxes, insurance etc that comes with each home.

I love using examples so let’s look at a quick one… say you have $800,000 to spend on a luxury vacation home. You could purchase a single $800k home and visit it as often as you can, that is one option but of course there is no diversification in this scenario. Another option is to purchase four $200,000 homes and “diversify” your vacation home money, you could buy a home in four different locations: beach, mountains, golf, and river for example. You could then spend time visiting each home throughout the year. This uses the same amount of principle ($800k) but you now have 4x the annual expenses!

Here’s a better option. Purchase four $200,000 quarter-share fractionals in four $800,000 homes. Now you have spent the same amount of money for ownership and access to four beautiful homes in four diverse locations. You pay only 25% of the expense in each home. In effect you are keeping your same standard, getting diversification in the process an all you have to “give up” is the time you likely weren’t going to use the homes anyway.

As I’m fond of saying… this is a win-win!