Fractional Ownership
THE SMARTER 2ND HOME
Fractional ownership is a fast-growing segment of the vacation-home market, but is it for you?
Buyers purchase fractional properties either because they can afford the whole, but know they won’t be able to use the property enough to justify the expenses, or they can’t afford a whole by themselves, but can afford part of one. “Fractional ownership” is the legal vehicle which provides a perfect answer to both scenarios. Owners get a beautiful high-quality home, in a highly desirable location, with great services, and a carefree vacation –all for only a fraction of the cost of what they would pay to buy a vacation home on their own.
With fractional ownership, title is held with the other owners, usually a total of 4-8 and sometimes a few more, as tenants in common. The benefits of owning real estate apply, i.e. depreciation on taxes and appreciation of the price of your share.
These are not time shares which are merely contracts specifying a right to use a property on certain weeks. Fractional ownership is an actual, deeded interest. You can sell it, leave it in your will, put it in a trust, 1031 exchange it, rent it out, or simply enjoy it. All this can be done without the approval of the other owners.
Another real benefit is the owner doesn’t have to be concerned with daily care or maintenance chores. Owners want to feel like they own a second home, but they really want to forego much of the work associated. Therefore, on-site, full-time property management ensures pristine condition within hours of the last owner’s occupancy. For mountain properties, this can include everything from shoveling snow from walkways, pre-made beds, fresh linens and towels, cleaning, refrigerator stocking, boat rental, purchased lift tickets, etc. Monthly fees are collected from owners for regular maintenance, insurance, association dues, utilities, etc.
Owners share in a set number of weeks per year rotation of the property thru a Common Ownership Agreement, defining rights and responsibilities of the owners.
Most buyers buy fractionals for a second home within 185 miles of their current home, and it is used as a getaway from their busy city life. The benefit here----fractional ownership is an affordable way to enjoy friends and family in a resort setting.
To learn more about fractional ownership and perhaps view a new, completely furnished example currently offered @ Shaver Lake, you may contact me at 559-284-4566 or sherry@thebusybroker.com.
