Owning a Piece of Paradise: Timeshares, Fractional Ownership & Whole Ownership

For many, timeshares are still synonymous with the notion that in exchange for a free meal you get a high pressure sales pitch and you’re then roped into buying an annual getaway at an expensive vacation home.

While timeshares have garnered a less-than-stellar reputation in the past, in recent decades major brands like Marriott, Disney, and Hilton have stepped in, revamping the timeshare experience to better accommodate vacationers’ needs and expectations.

But timeshares aren’t the only way to own a piece of paradise.

Vacationers can now choose between:

  • Timeshares
  • Fractional Unit Ownership
  • Whole Unit Ownership

So what exactly is the difference?

It all comes down to the type of ownership you want for your vacation home.

The Infamous Timeshare

Purchasing a timeshare simply means you’re paying to visit a resort during an allotted time every year. You don’t actually own the property — the title remains with the resort property owner.

Timeshare owners benefit from having a guaranteed one or two weeks at a resort of their choosing. And as timeshares have evolved since their inception in the mid-70s, resorts now provide more flexibility with floating weeks and timeshare points, allowing timeshare owners to vacation at multiple resort locations and during different times of the year.

Typically, you’ll be sharing your timeshare with 51 other vacationers as each timeshare owner pays for one week out of the year. With this amount of turnover, timeshares go through a substantial amount of wear and tear which can reduce the quality of the property and vacation experience. Sharing the space with so many other timeshare owners also makes it tricky to book or swap weeks during high peak seasons.

To get into the timeshare game, you’ll need a qualifying household income of $75,000. Be prepared to shell out a substantial upfront cost of around $22,000 to snag that beachfront property in Cabo or at a mountainside resort in Aspen. Maintenance costs average around $1,000 annually according to the American Resort Development Association (ARDA) and typically increase over time.

However, compared to fractional or whole unit ownership, timeshares can be your least expensive option to have a guaranteed vacation spot for the rest of your life. Or, of course, until you sell your timeshare.

What Is Fractional Ownership?

Fractional ownership incorporates aspects from both timeshares as well as whole unit ownership. Like a timeshare, fractional ownership involves multiple parties splitting time spent
vacationing at a resort. However, with fractional ownership, you actually hold part of the title and have partial ownership of a property that can potentially appreciate over time.

With ownership comes the hassles that go along with it including paying for maintenance, taxes, insurance, management fees, and housekeeping services. There is also typically a homeowners association (HOA) that you will be a part of.

While typically more costly than a timeshare, fractional ownership usually means a more desirable location within a resort, more luxurious amenities and facilities, plus longer stays split between fewer vacationers. Typically, you’ll share ownership with three to eleven other owners, meaning you’ll be able to vacation thirteen or more weeks per year.

Some of the more popular fractional ownership brands such as Four Seasons Residences and the Ritz Carlton Club offer resort destinations like Costa Rica, Hawaii, and St. Thomas where you have the ability to exchange your fractional unit for another in a different location ensuring your vacation experience never gets stale.

Choosing Whole Unit Ownership

Whole unit ownership is exactly as it sounds. You invest and own the entire vacation property. This means you don’t split ownership or time with other vacationers. (Another plus, you won’t
have to argue over decor decisions.)

You can use the property all 52 weeks out of the year or decide to rent out the space to others for additional income. How you spend your time throughout the year is completely up to you.

The expense is all on you, as well. Unlike fractional ownership where you can divvy up costs with other owners, with whole ownership you’ll be on the hook for maintenance, housekeeping, taxes, insurance, etc.

Like timeshares and fractional ownership, if you get tired of the same old vacation spot, you can vacation at other properties by joining vacation clubs like Third Home which typically cater to luxury vacation properties.

Frank Jermusek

Frank Jermusek, J.D.

President / Managing Director

Frank Jermusek is a Principal at SVN | Northco headquartered in Minneapolis, Minnesota. SVN has become one of the most recognized commercial real estate brands in the world with over 200 offices globally.