Partial ownership, also called "fractional ownership," is becoming more widely adopted in industries other than real estate as it lets investors, such as yourself, own assets that were once only accessible to high-net-worth individuals and entities.
Through this growing investment trend, you can gain access to high-value assets. You'll own a "portion" of them with lower upfront and ongoing costs.
Given its various benefits, fractional ownership can be a good way to start your investment journey, particularly if you haven't made any investments yet. If you haven't, you're not alone; nearly half (48%) of Americans have no investment assets, either, as media publication InvestmentNews points out.
Familiarizing yourself with how partial or shared ownership benefits investors can help you understand how it's driving industry transformation and why it could be an ideal strategy for you.
What Is a Partial Ownership?
Partial ownership is when multiple buyers purchase an asset and share its ownership. Each buyer will own a portion or share of the asset.
Because each buyer will only purchase a portion of the asset, they'd pay only for that share, rather than the full price.
How Does Partial Ownership Work?
With partial ownership, multiple buyers or investors first pool their funds. They'll then use this "collected" money to purchase a single high-value asset, which they would otherwise be unable to afford if they bought it on their own.
Based on their share, owners will split the upfront and ongoing costs of the asset and its benefits, such as:
- Usage rights
- Income
- Management
- Value appreciation
Why Is Partial Ownership Gaining Traction in Other Industries?
Real estate remains one of, if not the leading, asset people and investors co-own with others. As CBS News reported, for instance, a 2024 survey found that almost 15% of Americans co-bought a home with someone other than a romantic partner. Another 48% of the poll participants said they would consider doing the same.
However, this practice is no longer just limited to real estate. Nowadays, you can enjoy a piece of a high-value asset, whether a luxury car, expensive art pieces, or even a private jet.
Here's how and why partial ownership of assets has gained traction outside of real estate and is becoming one of today's sought-after new investment strategies.
Making High-Value Assets More Accessible
Expanding ownership models is one of the primary reasons investors are turning to partial ownership.
Through this type of ownership, you can invest and own expensive assets for a lower cost. Not only will you pay less upfront to own a share of the asset, but you'll also split the ongoing costs associated with ownership, such as maintenance and insurance.
Aside from real estate, fractional ownership also applies to:
- Luxury goods like cars and yachts
- Fine arts
- Expensive collectibles, such as vintage cars, high-end watches, masterpiece paintings, and rare wines
- Aviation, including private jets and helicopters
- Businesses, particularly digital enterprises and Software as a Service (SaaS) platforms
- Racehorses
- Expensive stocks and securities
Let's use fractional jet ownership as an example.
In this case, you'll own a share of a premium aircraft and have the right to its consistent access and use. You can enjoy private, high-end flight experiences for a set number of hours, which you can also often customize based on how frequently you travel.
Diversifying Portfolios
Fractional ownership can help you diversify your portfolio by allowing you to purchase small stakes in several different high-value assets. Because each co-owned asset has lower upfront and ongoing costs, you can spread your capital across more asset types, markets, and locations.
By spreading your funds rather than putting them all in "one basket," you can mitigate the risk of significant losses. On the other hand, if you place all your money in a single asset, you can lose all that capital if this investment fails.
Simplifying Investing With Technology
Another reason behind the growing popularity of partial ownership is that technology has made it easily accessible. Investors, both new and veteran, can access and invest in various assets in different geographical regions with the use of online platforms and mobile apps.
If you're a new investor yourself, you can use these systems to start investing, even if you have low capital. Since they're online, you can access your portfolio and assets anytime, anywhere, even on the go.
Frequently Asked Questions
Which Responsibilities Will You Share With Co-Investors?
Just as you'd split the cost of purchasing an investment, you'd also share the responsibilities associated with maintaining the asset. Expenses, both one-time and ongoing, are a perfect example.
Suppose you've purchased an equal share of a luxury car with four other people. Let's also say that each year, the vehicle costs $5,000 to maintain. In this scenario, you'd split the $5,000 into five (as there are five of you with equal ownership of the property), resulting in an ongoing maintenance expense of $1,000 per year.
Maintaining insurance is another example of a shared responsibility in partial ownership. Whether it's a vacation home, a luxury car, or a private jet, each owner would have to chip in to ensure the asset's appropriate and necessary insurance policies are valid and remain up-to-date.
Is There Any Disadvantage to Partial Ownership?
Yes. While partial ownership affords you access to assets you'd otherwise be unable to afford if you owned them alone, it also comes with some disadvantages, including limited control and usage.
With fractional jet ownership, for instance, you won't have 24/7/365 access to the aircraft. You can only use it for a set number of hours (e.g., 150 hours) a year.
Another drawback is the reduced financial upside. Any income the asset generates (e.g., rentals) will get split pro rata. Pro rata means an allocated amount of benefit (e.g., income) based on the fractional share of ownership.
Consider Expanding Your Portfolio With Partial Ownership
From lower upfront and ongoing costs to portfolio diversification and technological enablement, these are some of the top reasons partial ownership has expanded outside the realm of real estate. Given its benefits, this method can be an ideal way for you to get started on investing.
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