Mortgages & Creative Financing

The Pros and Cons of Fractional Ownership of a Vacation Home

Expertise: Landlording & Rental Properties
59 Articles Written

Are you looking to buy a vacation home, but are unsure if it is the right move for you and your family?

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If so, you might want to look at fractional ownership. It is a great way to still have many of the benefits of owning a vacation home while spreading out the risk and/or monthly bills.

What is fractional ownership? This is where 2 or more families purchase a vacation home together. They split all the expenses and income proportionately amongst the owners.

Advantages of Fractional Ownership

Shared Cost

Many people dream of owning a vacation home in a resort community, but sometimes their income does not allow this to actually happen. By joining in with another partner or two, an owner can split the monthly carrying cost of the vacation home — not to mention any unforeseen maintenance issues.

Ability to Buy a Bigger House or a House in a Better Community

The houses in the best communities oftentimes cost more than houses in less desirable neighborhoods. This is the first rule of real estate: location, location, location.

Related: 7 Smart Tips for Buying the Perfect Vacation Home

So by joining into a fractional ownership agreement, a potential buy can buy a bigger house or a house in a more desirable area. This will also reduce their risk if they ever wanted to sell the property.

Less Property Vacancy Due to Shared Use

With school schedules, extra circular activities and hectic work schedules, most vacation homeowners can really only enjoy their vacation home about 3 or 4 times a year. So even if you owned a vacation home with 3 other families, you still could use the property 17 weeks or more a year.

More Capital for Property Upgrades

All vacation homes, even the most lavish houses, need a little TLC every now and then. When you are sharing the cost of the vacation homes with other families, you can afford more upgrades than would be affordable if you were to pay for the upgrades yourself.

Shared Duties

If you decide to rent the vacation home out to other families, and one of your goals is the have the vacation home make a profit year in and year out, then you could split of up various jobs to the other owners.

For example, one owner might be in charge of talking to prospective renters and letting them know about the property, while another owner might be in charge of guest relations once the guest is actually staying in the house. By splitting up these jobs, you can reduce the monthly overall carrying cost of the vacation home and hopefully charge more money on the bookings as compared to relying on a property manager or vacation booking sites to fill up your vacation home calendar.

Disadvantages of Fractional Ownership

Hard to Sell

Oftentimes, it is hard to get out of or sell a fractional vacation homeownership.

Related: 6 Amenities to Ensure Repeat Business in Your Vacation Rental

Many times, prospective buyers get very leery about joining into a partnership with someone they do not know. Also, sometimes the other partner in the ownership can make it extremely difficult for the property to sell in hopes that they can pick up the full ownership or more of the ownership for pennies on the dollar.

In addition, it is very hard in some markets to find a real estate agent who will sell a fractional ownership. In some markets, it is just too difficult to sell.

Difficulties in Coming to an Agreement on Decorating

Many families might find it hard to agree on decorating ideas for the vacation home, and it is nearly impossible to make the house personable with pictures of the kids and family.

HOA or Local Rule Regulations May Restrict it

Some communities are now cracking down on fractional ownership of the vacation homes.

While it is hard for them to eliminate it altogether, some HOAs are limiting ownership privileges to just one or two owners. This also makes it difficult if you have 3 or more owners sharing in the ownership.

Clashing Plans for the Vacation Home

One owner may want to use the property for just immediate family members, while another partner may want to rent out the house as a short term vacation rental. Obviously, short term vacation renters can bring in extra money, but renters can also do damage to the property, while also limiting the owners’ overall usage of the property.


All in all, fractional ownership is just like anything else: it has its pros and cons.

My suggestion is, before you get into such a partnership, write up a detailed agreement that all owners can agree upon. This agreement should outline the responsibilities of each owner and also outline steps an owner must take if they want to sell their portion of the house.

The last thing you want to do is actually buy the property, then find out that each owner has a different objective with the vacation home.

Do you have any experience with fractional ownership? Would you consider this mode of vacation homeownership?

Leave a comment below!

Trey Duling has been managing and marketing vacation homes in the Orlando and Disney World area since 2001. His passion is helping investors make their vacation homes more profitable. Please visit his website at

    Arch S. Jeffery
    Replied almost 5 years ago
    We own a fractional share (4 owners) of a vacation home, so we get use every 4 weeks, plus we can trade. or use someone else time, with their approval. We bought the share of an original owner because there was a operating agreement in place and after reviewing it, we were comfortable with the rules. This has worked out very well for 5 years. Now we have a few partners who would like to sell, but they are having trouble because fractional ownership is scary, especially when you don’t know the other owners. I would do it again!!
    Cam Robert Rental Property Investor from San Francisco, CA
    Replied over 1 year ago
    Arch – did you guys include a ‘sale / liquidity clause’ in your operating agreement? You mention that a few owners want to sell, did they manage to do that? Or did you end up selling the entire place? Looking at this for myself, and trying to get smart on it!
    Douglas Larson
    Replied almost 5 years ago
    Nice article on the upside and downside of fractionals! I have owned 5 different quarter share condos in the same resort in Park City, Utah over the last 9 years. I have purchased each one from motivated sellers and made a little money on re-sale on all but one. The real benefits are not the few thousand bucks I’ve made with each one. I live only 40 miles away and the resort allows day use for owners who just want to hang out at the pool or in the owner’s lounge or use the underground, heated parking for the day during ski season. It’s been awesome as a lifestyle design investment, especially when I have guests come up with me for the day to ski, snowboard, use the hottubs, steam room, etc. at “my resort.” The downside is just what you have mentioned with HOA issues, high maintenence fees, special assessments, not being able to sell quickly, etc. Fractionals and timeshares are not great investments by the numbers but if purchased directly from motivated owners they can have some great benefits!
    Jonna Weber
    Replied almost 5 years ago
    We sold our interest in a fractional ownership this year. Loved the product, but found that with busy kids involved in sports, it was challenging to match up the weeks that we had it available to us with the times we could actually take the time away to use it. To be clear, it is a luxury purchase, not a true investment unless you happen to get lucky in timing. I would encourage anyone considering to really pencil out the numbers to make sure it is the right thing for you based on your amount of usage. If you do the math and find it would be less expensive per night to stay as a guest in the local luxury resort instead, it may be time to pass on ownership.
    Dennis Lanni
    Replied almost 5 years ago
    I agree that fractional ownership should be viewed as a luxury unless you’re buying your factional interest very cheap (50% discount minimum) and are OK being the spoiler (i.e. filing a partion action/lawsuit to liquidate/sell) which can be very profitable. Question- do you know if any lenders lend on fractional interests— seems like that could be a profitable business.