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For much of shopping history, if you couldn't afford to buy something luxurious, but wanted it, your strategy usually went like this: Buy it on credit and pay it off until you own it. Or buy it on credit, never get caught up on the interest and die certain that your future impoverished descendents will visit your grave -- and spit on it.
Today, there's a new plan. Instead of purchasing an entire mansion or Ferrari, many people are buying just a piece of it, to save on overall cost and reduce ownership hassle.
But there are drawbacks to sharing.
What's often called fractional ownership, or sometimes
asset-sharing, is a term that's been around since at least the beginning
of the 20th century, and a concept that's endured longer than that,
but it was usually associated with real estate and ranches. Later time share homes popularized the concept, and in recent decades,
private jets.
But as the 21st century evolves, so has the concept
of fractional ownership. The wealthy and upper-middle class are
still fractional owners of private jets and vacation homes, but
also cars, yachts, designer handbags, jewelry -- and even fine art.
Whether this is a good idea is up to the buyer and, as with any sale of an expensive item, there are pros and cons.
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Pros and cons of fractional ownership |
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| Why fractional ownership? |
Why not fractional ownership? |
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You know you'll only use your luxury item sporadically. |
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The fractional ownership company will take care of maintenance and storage costs. |
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When the fractional ownership company decides to sell an item you co-own, you will receive a share of the profits, if there are any, and then you can continue fractionally owning your replacement. |
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You are sharing. Even if you feel that the scheduling of your co-property is completely fair, you can't suddenly decide you want to use it and expect that it will be available. |
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Not all fractional ownership companies are equal. If you don't do your homework, you could be stuck with one that goes bankrupt and inherit and share with your co-owners the complicated problems you wanted to avoid. |
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If the company is new and untested, you might find that the maintenance or scheduling does not go as smoothly as you had hoped. |
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You have to bow to the rules of a fractional ownership company. For instance, if you co-own a Porsche, you may not be able to drive it across the country, but just in neighboring states. |
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Not surprisingly, George Kiebala is in the pro camp. He owns Curvy Road, a Chicago-based company that sells fractional ownerships of exotic cars.
"The level of owning a Lamborghini is pretty high," says Kiebala. "If you've got the money, and you want to have your car sitting in your condo's garage in Belize, it still needs to be stored a certain way. It needs to be driven frequently or various things will go bad, and the car can become inoperable, and suddenly you have a giant quarter of a million dollar piece of metal in a garage that doesn't run. And people would think you were nuts."
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