What The Difference Between a Fractional and a Timeshare

Thinking of buying or selling timeshare, chances are that you are well aware of what timeshares have to offer.  Vacation clubs are starting to replace the traditional timeshare as a more attractive deal because they simply allow you to get more for your money and they are more flexible.  Vacation clubs tend to be offered through large companies such as Marriott of Hyatt as well as large extended networks.

Most timeshares are still considered deeded property despite actual physical ownership of a specific piece of property.  Ownership in a vacation club network can be viewed like owning stock in a company.  The rules of ownership are still generally based on the ownership laws of traditional real estate.

What Makes a Timeshare A Timeshare?

This is simple.  Combined ownership, outside management, and predetermined dates of ownership, though this aspect is fading as vacation clubs gain popularity.  Timeshares can be a stand alone house, a condo, on the beach or in the city.  There is no predefined rules for what the structure looks like, but most commonly it is a traditional resort.  The higher the demand is for a location the better.

So, What is a Fractional?

A fractional is all of the things previously mentioned and more.  Fractional generally cost more and do not set aside predetermined vacation dates.  Availability may be on a first come first serve basis, a lottery system, or negotiated for.  

The benefit of a fractional is that there are generally few owners so you get a larger piece of the pie.  Fractional also often come with many other perks and luxuries, like cars, personal chefs, and boats.  And, the best part is that it is all part yours.

Fractionals Sound Great but Why would Anyone Buy One?

What you must realize is that fractionals are usually built in areas that are extremely valuable and not reasonable for one person to purchase.  With the combined purchasing power of a number of wealthy people it is possible to pool enough money to build fabulous retreats on highly valuable land.

Fractionals also have the potential to be better long term investments than timeshares.  You own more, and you own in a highly valuable location.  The networking that goes along with owning a truly valuable fractional can be immense.  Many fractionals are not sold on the open market and are offered for sale on an invitation only basis.

Some of the similarities of fractionals are as follows.

• Once bought can be deeded properties.
• You are normally allowed to rent out to others during periods of non-use.
• They are commonly shared among family and friends.
• You can sell at any time, unless there is some type of contractual agreement.
• They are part of your estate and so being, you can will the deed to anyone you like.

There are some important distinctions here and if you are in the market for fractional, good for you.  You will probably not be able to find anything for less than a couple hundred thousand.

Timeshares are a great place to start and fractionals are a great place to finish.  So, if you have a timeshare now and you are considering selling timeshare to trade up to a fractional I urge you to take action.