- A trend of “fractional ownership” allows almost anyone to purchase or invest in real estate.
- Buyers purchase shares of second homes or rental properties for as little as $5 via these startups.
- Owners keep the gains in the property’s value when they sell — unlike with timeshares.
A trend in real estate is making second-home and investment-property ownership more affordable: fractional or co-ownership.
In short, homebuyers can purchase a share of a property instead of the whole thing.
The main audience for fractional ownership is those interested in a property that’s not their primary residence — whether it’s a vacation home or an investment property. Buyers have the ability to purchase a share of a vacation home and enjoy the property as much as their respective percentage allows or buy a portion of a property and earn passive income when it’s rented out to tenants.
“For a lot of people in this country, it’s kind of tied into the American dream of owning property and owning a piece of the city you’re in,” Ryan Frazier, the CEO of the real-estate-investing platform Arrived Homes, said.
Arrived is one of several companies working to remove the barrier to entry for second-home purchasing and investing.
Real estate is regularly touted as a safe and profitable investment, but as it has become increasingly difficult to buy a home, co-ownership lets buyers reap the benefits at a fraction of the cost.
The two types of ownership — vacation and single-family rentals — have doubters. Vacation rentals, especially those listed on Airbnb, have received pushback for reasons from noise to an increase in home prices. And some locals have butted heads with co-ownership companies, like Pacaso, citing displeasure with what they believe are timeshares with a fancy new name.
Fractional ownership for second homes differs from a timeshare because while both allow buyers to use a property for a given amount of time each year, buyers of shares under fractional-ownership companies are able to keep the gains in the property’s value.
We rounded up a list of eight fractional-ownership companies, presented in alphabetical order.