Investing on Foothold

foothold invest

Fractional Ownership in Real Estate: Is it Worth it?

Reading Time: 3 minutes

Real estate is a popular choice for wealth building, especially with current inflation rates and unpredictable stock market trends. However, a Pew Research Center study suggests that owning homes is increasingly challenging for current generations compared to their predecessors, mainly due to property price growth outpacing income growth in the past decade.

To address this, new investment models like fractional property ownership and real estate crowdfunding have emerged. Fractional ownership allows individuals to own a portion of a property instead of the entire asset. The property is divided into shares and sold to different individuals, sharing costs, potential profits, and responsibilities among stakeholders.

Fractional ownership serves both investment and vacation purposes. For investors, it offers a way to acquire rental properties in high-growth markets through platforms like Foothold Homes, even allowing non-accredited investors to participate. It’s important to note that fractional ownership differs from investing in publicly-traded REITs, although it may offer similar tax benefits in some cases.

For vacations, fractional ownership provides an affordable way to own a luxurious holiday property. Co-owners can enjoy the property for a certain number of weeks each year, share it with family and friends, or exchange time with properties in other locations.

Fractional ownership should not be confused with timeshares. With fractional ownership, you acquire a deeded share of the property, which allows for resale and other ownership rights. Timeshares only involve purchasing usage time without any ownership rights.

In conclusion, fractional ownership offers an alternative investment and vacation option, allowing individuals to benefit from real estate without buying an entire property.

Is Fractional Real Estate a Good Investment?

Fractional real estate ownership adds a unique twist to property investment. With a low entry point and professional management, investors can diversify their portfolio. Let’s explore scenarios where fractional ownership can be strategic.

Equity is key

Unlike timeshares, fractional ownership gives you equity. This means you’re making a legitimate real estate investment that generates rental income and profits from property appreciation. A management platform creates an LLC or LLP to own the property. Your ownership percentage determines your share of the rent and potential profit when you sell.

Affordable second home

Owning a second home or vacation rental is expensive. Fractional ownership offers investment growth potential and shared usage rights. You can enjoy the property without the full expense of owning it.

Extended stays at your vacation property

Fractional ownership allows for longer stays multiple times a year, unlike timeshares that usually only offer one or two weeks of usage.

Real estate investment without heavy capital

Fractional ownership is a great strategy for those who want to benefit from real estate without a large capital investment. Platforms like Foothold offer fractional investments starting as low as $200.

More control over your property

Fractional ownership usually eliminates the need for owners to handle maintenance and upkeep. A management team takes care of these tasks, but fractional property owners still have a say in property management.

Investing in rental properties is simpler than ever.

When comparing timeshares to fractional real estate investing, it’s important to understand the significant differences between these two ownership models. If your goal is to expand your portfolio, establish a passive income stream, and accumulate equity in real estate investments, then fractional ownership is the way to go. While residential real estate has been a prime investment in recent history, many people are hindered by complex operations and high initial costs. At Foothold, we are dedicated to helping everyone build wealth through modern real estate investment that caters to their needs. With us, fractionally investing in vacation rentals, earning rental income, and growing equity through value appreciation is a breeze as we handle all the other aspects. Start your real estate investment journey today by exploring the available properties.

How to Buy an Airbnb Rental Property

Reading Time: 3 minutes

According to Airbnb’s data, they have a global network of over 4 million hosts. With more than 150 million users and over 1 billion bookings, Airbnb properties are available in 100,000 cities worldwide. In North America, the average cost of an Airbnb stay is $163 per night. Given these statistics, it’s appealing to consider running an Airbnb business. This article will guide you in assessing if Airbnb is the right investment for you and how to choose a profitable rental property for long-term profitability.

Renting out a property on Airbnb is simple: list it as a short-term vacation rental, accommodating different guests throughout the year. In addition to Airbnb, you can also list the property on other vacation rental platforms like Vrbo, HomeToGo, Homestay.com, and FlipKey.

Investing in a vacation rental property like Airbnb is appealing due to its popularity. The high demand for vacation homes and potentially higher rental rates in popular travel destinations make listing a property on Airbnb an attractive strategy for real estate investors. Initially, most Airbnb hosts start by renting out a room or considering the vacation rental income as supplementary. However, with the right property in desirable locations, hosts can expand their portfolio and increase their income.

It’s important to note that Airbnb bookings declined during the early days of the 2020 pandemic but have since rebounded as travel resumed, with a trend towards rural holidays away from crowded places. This pattern has continued, with both rural and urban areas witnessing high bookings.

When comparing Airbnb rentals to traditional properties, the key difference lies in the rental duration. Airbnb has the potential for higher profits due to higher daily rates in certain markets, but conventional rental properties offer stability and consistent cash flow. The decision to lease your property as an Airbnb rental or a conventional long-term lease depends on factors such as the target market, your level of involvement, and your financial goals.

Airbnb rental properties have their own set of advantages and disadvantages. Benefits include potentially higher cash flow, lower maintenance costs, flexibility, and the ability to rent out a portion of your residence. However, Airbnb rental properties can also have high upfront costs, be time-consuming to manage, and come with a higher risk due to the number of guests.

The profitability of an Airbnb property investment relies on factors beyond the property’s physical condition. Key aspects include location, visitor volume, and local market data. Below, we explore acquiring an Airbnb rental property.

Setting a budget and property type

Begin by establishing a feasible budget that considers borrowing potential, interest rates, inspection and closing fees, repairs, renovations, and management expenses.

Choosing a location

The critical decision is selecting your Airbnb property’s location. Top vacation rental spots include Nashville, Tennessee, Hawaii, and South Carolina. Be aware of cities like New York and San Francisco, where laws restrict or ban Airbnb rentals. Research homeowner association rules too.

Market Analysis

Understanding the vacation rental real estate market is crucial. Determine the right property type based on city or resort areas and the type of guests you aim to host. Utilize market analysis or a real estate agent to assess your property’s potential return on investment.

Property Listing

Set a competitive rate by analyzing comparable properties and adjusting rates seasonally. Consider day of the week, time of year, and market demand and supply.

In Summary

Investing in Airbnb properties can provide income and an appreciating asset. If you’re not ready to purchase, Foothold offers an opportunity to fractionally invest in vacation rentals starting at just $200. Begin your property investment journey today! View available properties here.