Fractional Real Estate Ownership That Makes Sense
In the beginning, if you wanted to own a vacation home, you had to buy the whole thing, lock, stock and year-round headaches.
Now, the second home industry has evolved to the point where you can slice and dice your holiday house into practically whatever amount of time you actually use it.
Indeed, one of the fastest growing forms of vacation real estate is known as "fractionals," a shared-ownership concept in which you purchase anywhere from as little as two weeks of annual use to as much as three months.
"The concept is at the cutting edge of resort real estate," says Richard Ragatz, a leading industry consultant.
Buying weeks sounds a lot like time shares, but fractionals are way different.
In fact, it's more like the old days when a bunch of friends or relatives came together to buy a resort property.
Only in this case, interval ownership comes with formal use and access rights and a professional management company to run the show so there are no disagreements over upkeep, who damaged what or who gets to use the place and when.
Fractional ownership is different from time sharing in other ways, too.
One of the most significant is that it's an equity-based purchase, says Hart Rist, sales manager at The Hammocks, a group of 23 shared homes clustered into three muses on Bald Head Island, N.
C.
Unlike time-shares, in which you buy the right to use a place, when you buy into a fractional resort, you are buying real estate.
"You get a deeded piece of real estate, just not for the whole thing," says Hart, who calls fractionals the "most prudent second-home alternative" for someone who only wants to invest in a place for the amount of time they'll actually use it.
Another big difference, according to Bonny Etchemendy of All Season Resort Realty at Teton Springs, a 780-Idaho property, is the "almost unlimited" flexibility that comes with fractionals.
For example, a one-sixth ownership interest in a 3,000-square-foot cabin at Teton Springs comes with three weeks usage guaranteed in the summer and three more weeks in the winter.
You can use your weeks one at a time or reserve two weeks for one visit and use the third for another visit.
Or, if you want to hold a big family reunion, you can use all three weeks at once by reserving three of the 16 cabins planned for the project.
And of course, if the cabins are not occupied by your fellow owners, you have the right to use them whenever they're available beyond your three-week allotment.
"You can use your cabin as much as space is available, and because you are getting a deeded interest in a property, it's something you can sell because it's real estate and you own it," says Etchemendy.
Fractionals also are a step above time shares in terms of quality and amenities, typically a major step above.
At Stone Eagle, a private golf club in Palm Desert, Calif.
, you get to use a "really high-end golf club, among the best in Palm Springs, plus a really luxurious place to live without spending millions of dollars," says Stone Eagle Vice President John Fitzpatrick.
At Teton Springs, swimming pools, tennis and basketball courts, and an indoor exercise facility with all the latest cardio equipment are all on the Victor, Idaho property.
Plus there is unlimited golf.
And at Bald Head, you get the use of an entire 12,000-acre private island on the Atlantic Ocean accessible only by ferry and where only bicycles and golf carts are allowed.
According to his latest survey of shared-ownership resorts, consultant Ragatz counts 300 fractional interest properties, 153 of which are in active sales.
Three out of four are in the United States, and three states - Colorado, California and Florida - are home to one out of every four.
Prices, of course, are all over the park.
At Stone Eagle, a one-ninth interest in a two bedroom residence runs $295,000, while $435,000 will snare you 21 days between November and May plus additional "flex" time when available in a four-bedroom house.
At the Hammocks, the cost for four weeks - a week in each season on a rotating basis "so everybody can enjoy each holiday" - runs from $150,000 to $200,000.
According to Ragatz, total sales in shared-ownership reports totaled a whopping $2.
3 billion in 2007.
Sales in fractional interest resorts accounted for $485 million, or 21 percent of the total, proof positive the concept is no fluke.
The consultant found that at least eight different sizes of shares are being sold, with one-fourths by far the most popular.
And the majority of places offer such amenities as private concierge and pre-arrival food and beverage stocking services.
The average price per share, the survey found, was $172,7900, or $23,280 a week.
Now, the second home industry has evolved to the point where you can slice and dice your holiday house into practically whatever amount of time you actually use it.
Indeed, one of the fastest growing forms of vacation real estate is known as "fractionals," a shared-ownership concept in which you purchase anywhere from as little as two weeks of annual use to as much as three months.
"The concept is at the cutting edge of resort real estate," says Richard Ragatz, a leading industry consultant.
Buying weeks sounds a lot like time shares, but fractionals are way different.
In fact, it's more like the old days when a bunch of friends or relatives came together to buy a resort property.
Only in this case, interval ownership comes with formal use and access rights and a professional management company to run the show so there are no disagreements over upkeep, who damaged what or who gets to use the place and when.
Fractional ownership is different from time sharing in other ways, too.
One of the most significant is that it's an equity-based purchase, says Hart Rist, sales manager at The Hammocks, a group of 23 shared homes clustered into three muses on Bald Head Island, N.
C.
Unlike time-shares, in which you buy the right to use a place, when you buy into a fractional resort, you are buying real estate.
"You get a deeded piece of real estate, just not for the whole thing," says Hart, who calls fractionals the "most prudent second-home alternative" for someone who only wants to invest in a place for the amount of time they'll actually use it.
Another big difference, according to Bonny Etchemendy of All Season Resort Realty at Teton Springs, a 780-Idaho property, is the "almost unlimited" flexibility that comes with fractionals.
For example, a one-sixth ownership interest in a 3,000-square-foot cabin at Teton Springs comes with three weeks usage guaranteed in the summer and three more weeks in the winter.
You can use your weeks one at a time or reserve two weeks for one visit and use the third for another visit.
Or, if you want to hold a big family reunion, you can use all three weeks at once by reserving three of the 16 cabins planned for the project.
And of course, if the cabins are not occupied by your fellow owners, you have the right to use them whenever they're available beyond your three-week allotment.
"You can use your cabin as much as space is available, and because you are getting a deeded interest in a property, it's something you can sell because it's real estate and you own it," says Etchemendy.
Fractionals also are a step above time shares in terms of quality and amenities, typically a major step above.
At Stone Eagle, a private golf club in Palm Desert, Calif.
, you get to use a "really high-end golf club, among the best in Palm Springs, plus a really luxurious place to live without spending millions of dollars," says Stone Eagle Vice President John Fitzpatrick.
At Teton Springs, swimming pools, tennis and basketball courts, and an indoor exercise facility with all the latest cardio equipment are all on the Victor, Idaho property.
Plus there is unlimited golf.
And at Bald Head, you get the use of an entire 12,000-acre private island on the Atlantic Ocean accessible only by ferry and where only bicycles and golf carts are allowed.
According to his latest survey of shared-ownership resorts, consultant Ragatz counts 300 fractional interest properties, 153 of which are in active sales.
Three out of four are in the United States, and three states - Colorado, California and Florida - are home to one out of every four.
Prices, of course, are all over the park.
At Stone Eagle, a one-ninth interest in a two bedroom residence runs $295,000, while $435,000 will snare you 21 days between November and May plus additional "flex" time when available in a four-bedroom house.
At the Hammocks, the cost for four weeks - a week in each season on a rotating basis "so everybody can enjoy each holiday" - runs from $150,000 to $200,000.
According to Ragatz, total sales in shared-ownership reports totaled a whopping $2.
3 billion in 2007.
Sales in fractional interest resorts accounted for $485 million, or 21 percent of the total, proof positive the concept is no fluke.
The consultant found that at least eight different sizes of shares are being sold, with one-fourths by far the most popular.
And the majority of places offer such amenities as private concierge and pre-arrival food and beverage stocking services.
The average price per share, the survey found, was $172,7900, or $23,280 a week.
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