Achieving maximum profitability, generating passive income, and benefiting from appreciation are the main goals of any investor. Today, a traditional real estate investment yields no more than 2% to 2.5%; in other words, immobilizing capital in this type of asset implies a return that would take, in the best-case scenario, up to 40 years to recover the invested capital. This is the kind of investment that should be considered an expense, a whim, or a luxury.
But if what you are looking for is a smart investment, fractional properties are an excellent alternative for investors seeking reasonable returns, while also having access to a high-end hotel property and enjoying its use.
And this has nothing to do with purchasing power; it represents a new paradigm in hotel real estate investment.
It is even possible to acquire a one-sixth fraction of a vacation property, which allows you to enjoy one-sixth of the tourist year — that is, eight weeks per year, for life, two in each season — and allocate some weeks for personal use and others for rental income, developing a “Smart” system that solves vacations for life.
A fractional vacation property is so convenient because it has two driving forces: on one hand, the real estate business, since it is an investment in property; and on the other, the hospitality business — a rapidly expanding industry that accelerates capital recovery and increases internal rates of return up to four times compared to traditional real estate investment.
To this, a series of advantages must be added:
1. Low entry barrier. Investment in fractional properties has a very competitive value, since it is possible to acquire one-sixth, one-third, one-fourth, or even half of a property, paying that same proportion. In other words, it allows many more people to access hotel real estate investment with higher profitability.
2. Low exit barrier. A fraction of a property has a higher resale speed than a full property, due to its more accessible ticket price and because what is being sold is a fraction of a business, not just a property.
3. “Smart” investing. It allows, with capital equivalent to an apartment or a house, the creation of an “investment basket” by distributing capital across fractions of suites, condominiums, or vacation chalets in top-tier hotels, diversifying the investment and reducing risk.
4. Aligns investment with use. Statistically, a person who owns a vacation home or country house uses it between 28 and 35 days per year, with high capital immobilization and significant maintenance costs. A fractional property allows you to acquire exactly what you are going to use. If you need more nights for use or rental, you can acquire more than one fraction.
5. Expands property use. A fractional property offers at least four ways to enjoy it: personal use; lending it to a close family member; renting it out — achieving returns up to four times higher than traditional real estate; or exchanging it through a vacation exchange company and using it at other destinations.
