Fractional Ownership - The Latest Trend in Vacation Rental Properties

Owning a vacation home in the tropical paradise of Maui might seem out of reach for some, but one of the hottest trends in Maui real estate is fractional ownership of property. A step-up from the concept of timeshares, this burgeoning business allows investors to own high-value accommodations for a fraction of the usual price.

Fractional ownership simply means that two or more people purchase a piece of real estate collectively. This allows co-owners to enjoy the property for a predetermined number of weeks per year while also benefiting from the equity and appreciation of a vacation rental in a highly desirable location.

Shareholders also divide the costs involved in property ownership, including taxes, utility costs and maintenance fees. This solution makes good financial sense, considering that many people spend just a few weeks out of the year at a vacation home.

These types of shared-property arrangements aren't new. Family members, for instance, often have several owners on the title of an inherited home. However, this type of asset-sharing can involve parties that do not necessarily carry sentimental attachments to the holding, and want to enjoy them simply as sound financial and recreational investments.

In some cases, investors hire companies that specialize in property management in Maui to oversee the scheduling of vacation use between owners, handle liability and utility payments and arrange for maintenance. This allows the shareholders to limit personal contact with one another to formal business meetings once or twice a year. One drawback to this type of investment might come down to personal style and taste, as the collective parties must approve all decor, furnishings, upgrades and remodeling projects.

Some investors might wonder what the difference is between fractional ownership and a timeshare. Primarily, the difference comes down to financial liability. In a timeshare, the cost usually is limited to a weekly fee or rental cost while an individual taking on one-quarter of a property purchase in Maui will absorb a higher initial cost.

Typically, these types of homes or condominiums come with luxurious amenities in highly marketable, private locations, increasing the desirability - and value - of the property. As opposed to timeshares, properties that are fractionally owned generally appreciate over time, as does the shareholder's value. Co-owners can sell when the value is at its highest, increasing the possibility of profit for their investment.

As a popular tropical vacation destination, Maui consistently draws return visitors seeking rejuvenating getaways at its beaches, mountains and island communities. The appeal of the area makes fractional ownership ideal for those looking to invest in a second or third property.