What is co-ownership?
Vacation home co-ownership is a powerful model that is democratizing second home ownership. By bringing up to 8 co-owners together to jointly buy a property, people are able to acquire a share of real estate that they may otherwise have been unable to achieve. Soaring property prices and rising inflation can create huge hurdles for potential independent buyers, but co-ownership makes the second home market more accessible and refreshingly viable.
A growing number of co-ownership providers are entering the market as this new model gains popularity, and these providers handle all the legal and logistic aspects of co-buying a home. Acting as a neutral third-party administrator, the provider brings suitable co-buyers together to purchase portions of a vacation home and equally share the ongoing property running expenses. These co-owners have legal ownership of the vacation home and benefit from any appreciation in the property - just like any other residential real estate.
Co-ownership also means that a vacation home is professionally managed in terms of administration, décor, maintenance, and scheduling - which is fairly structured to allow all the co-owners an equal portion of time per year at the vacation home. Co-owners enjoy exclusive use of the entire property and can easily reserve vacation periods through the provider’s app which offers both planned and last-minute stays.
How is co-ownership better than full ownership?
Co-ownership differs from full ownership in the following ways:
1. Co-ownership enables co-owners to share the financial load of full ownership
Co-ownership empowers you to own a vacation home without having to bear all of the related costs on your own. By co-owning a property, the financial burden (such as the initial purchase price, taxes, insurance, furnishings, appliances, and maintenance costs) can be shared amongst the co-owners, making a property brilliantly affordable.
2. Co-ownership providers take care of all property maintenance, repairs, cleaning, furnishings, and bills
Owning a property on your own can feel like more of a hassle than it’s worth when you’re faced with the reality of managing the home’s administration and maintenance duties. More often than not, sole owners feel the pressure to work on their property when they’re there, rather than relaxing in their precious vacation time.
Co-ownership offers the advantage of owning a vacation home without having to worry about any of the more mundane sides of ownership. From pool maintenance to painting, and cleaning to landscaping, every aspect is lovingly looked after by the co-ownership provider. Plus, you benefit from a real turn-key property where everything from luxury linens, furniture, appliances, and high-end interior design have been organized on your behalf.
With in-destination experts looking after each co-owned property, all property services are seamlessly run, so there are no issues trying to sort out internet connection or plumbing services in a foreign language on your own!
3. Feel the freedom and flexibility of co-owning a vacation home
If you’ve spent a fortune buying a full vacation property, you’ll feel the pressure to spend every waking minute of your free time there. In general, sole owners have to spend at least half the year at the property to justify the investment, but life doesn’t always allow that to happen.
Co-ownership takes away that sense of guilt, as you only invest in a share of the home proportionate to the amount of free time you have. From 1/8 to 1/2 you can own exactly the right amount for your needs and lifestyle - perfect for those with busy lives who don’t want to feel tied to a vacation home.
4. A co-owned home is used responsibly
Many independently owned vacation homes sit empty for large portions of the year, but a co-owned home is used to its full potential, making good use of the property in a responsible manner.
5. A co-owned home is safe all year round
When a vacation home lies empty, it’s at higher risk of weather damage or off-season security threats. With no one around to look after a property, owners can be forced to employ a local property manager to watch over their home, but this is often costly.
Co-ownership offers a sensible alternative to this, as co-owned homes are used far more frequently, and providers keep a watchful eye over co-owned properties all through the year, keeping them safe and protected.
6. Some co-ownership providers will help you to rent out your home
Just as individual owners have the option of renting out their property, some co-ownership providers will permit this too. This is a way of achieving a return on investment when you don’t have the time to vacation there.
In this case, the provider will organize rentals for you – finding trustworthy, vetted renters and saving you from having to list the property on platforms such as Air BnB or VRBO where you’re lumbered with the logistics of running a rental.
How is co-ownership better than timeshare?
Co-ownership is distinctly different from timeshare. These are the reasons why:
1. Enjoy true property ownership
With co-ownership, you genuinely own real estate, unlike timeshare which is zero equity and only gives you the right to stay in a property. A co-owned home is owned through an LLC (or country-specific equivalent) where you and your co-owners retain 100% equity.
2. Benefit from property appreciation
As a co-ownership interest is linked to the value of a property, you will benefit from any gains if the home appreciates – just like a standard residential property.
Timeshares, on the other hand, often have a lease contract in place for decades. And it’s common for these properties to depreciate in value, making them a very poor investment.
3. Sell your co-ownership interest with ease
After the first year, most co-ownership providers are happy for you to sell your share at a time that’s right for you - and at your preferred price. The provider will work with you to find a new buyer, and you can also use your own real estate agent to market your ownership interest, just like any other real estate listing.
On the flip side, timeshares are almost impossible to sell and often result in a loss of money when you want out. Buyers never truly own a slice of the property, so timeshare gives people a very false sense of ownership.
4. Co-owned homes have a fair & flexible booking process
Timeshares are becoming a thing of the past due to their inflexible scheduling. As 50+ people buy into a timeshare, you may only be offered a stay of 1 week per year, which is set in stone and offers zero flexibility should you need to change dates.
A co-owned home has between 2 – 8 owners, meaning there are more available weeks for everyone to spend there. Most providers have user-friendly apps which handle all scheduling and make it easy to book stays both in advance and at short notice. You can secure dates that work for you, thanks to the flexible nature of modern booking systems, and all high-demand dates such as Christmas and Thanksgiving are split fairly amongst the co-owners.
5. Enjoy a luxury stay at a co-owned property
Where timeshares are usually condominiums or small villas in a shared complex, co-owned homes are high-end properties in exclusive, private locations.
In general, co-owners also have direct contact with their provider who ensures that their stay is as seamless, stress-free, and enjoyable as possible.
How is co-ownership better than fractional?
At Kocomo we see co-ownership as an improved and modern version of the fractional model from the past. Co-ownership is a version 2.0 of fractional, in which current players are taking this shared ownership concept in a positive and exciting new direction.
Let’s look at the advantages of modern-day co-ownership:
1. Modern co-ownership is transparent and straightforward
In previous times, fractional properties were sold by developers or large hotels that provided little transparency on price.
Today, new co-ownership players are creating the right structure for co-owners, where the property value, margins charged on top, and future property maintenance costs are all crystal clear. This fair and open approach is fixing the cracks in the old fractional model.
2. It’s easy to sell your co-ownership share
As traditional fractional properties didn’t have a separable share, it was difficult to resell a fraction and developers were reluctant to help buyers get out.
At one time, developers of hotel chains only had a sales force in place to sell the initial fractional shares, however, these sales teams would then be dismantled, meaning there was no one to help resell your fractional share.
With a co-owned property, you buy 1/8 of the share of the LLC (or country-specific equivalent) which makes it easy to buy and painless to sell your share. This new co-ownership environment is creating a new asset class, where second home ownership is now a realistic and logical option for many more people.
3. Co-ownership enriches lives
Co-owned homes are professionally managed by the co-ownership provider, unlike fractional properties from the past where buyers were left feeling unsupported and exploited.
Today, co-ownership providers offer a full end-to-end service, managing every aspect of home ownership, from bill paying to maintenance, so you can enjoy every second of your vacation time, and focus on living life to the full. As a modern-day co-owner, you have made one of the best investments of your life – spending time with loved ones.
How is co-ownership better than investment only?
Investment only is a way to invest in real estate and earn rental income. Any amount from $100 to several $100k can be invested, and while this enables you to build a real estate portfolio and benefit from property appreciation, investment only does not allow you to use the home.
The co-ownership model is centered around your enjoyment of a vacation home. Not only does it empower you to build wealth through real estate, but it also benefits your life as you get to use and enjoy the property. With a co-owned home, you profit from any appreciation in the value of your co-ownership share, some providers allow you to achieve a rental income from your unused weeks, and above all, you are the owner of a vacation home that enhances the lives of you and your family.