Example of Fractional Ownership

For a better illustration, let us consider an example. Imagine there is a beachfront property which lies in a destination that one considers to spend the vacations at. Its worth is $5 million. This has been split into 10 shares. A group of investors has invested into it, one of them having purchased one share and priced $500,000.
Ownership Structure
There are 10 owners of 1/10th share.
The property is leased for a part of the year, and leasing accrues an annual income of $250,000.
The investors share rental income in proportion to the percentage owned. So, each investor enjoys $25,000 annually
Expenses:
There are annually maintenance charges of $50,000, property taxes of $25,000 and management expenses of $15,000 .
These costs are shared among the investors, thus the expense share of each investor amounts to $9,000 per year.
Usage Rights
The investors agree upon the use of the property turn by turn. So each investor gets a hold on property usage for one month in a year.
As he holds 1/10th share of it, he gets 30 days for his usage within the property at the given month.
Exit Strategy
The investor can sell his share to the management company or privately. If the property has appreciated, the investor is likely to sell his share for a higher price than he bought it for.
Therefore, through fractional ownership, any investor can own a luxury beachfront property without having to have $5 million as each owner earns rental income in addition to his or her own use.
The offering of fractional interests in a single property has come to symbolize the modern solution for spreading risks and rewards and investing in such high-value, typically expensive real estate. Luxury property would be within range, portfolio investment diversified, and the load and burden that come with ownership sometimes seem less cumbersome with this arrangement.