Understanding The Basics Of Fractional Ownership

Part 1 In A Three Part Series

We all dream of having a home away from home, that beachfront property or ski getaway we so deserve. The concept has understandably become part of the American dream. Unfortunately, statistics show that those of us who have a vacation home rarely have the time to use it and the rest of us can’t figure out how we can afford one.

A new option known as fractional ownership has been evolving over the past few years and seems to solve both problems. Fractional ownership allows purchasers to own a share of a condo or home in the location of their choice for a fraction of the cost.

Sound like a glorified timeshare? My sentiments exactly! There are a handful of differences. The first being that most fractional owners own five to 26 weeks and the average timeshare owner owns only one week. Another key difference is cost. Timeshares can be purchased for a few thousand dollars a week where fractionals rarely cost less than ten thousand dollars a week. While the cost is more, it comes with the service you would expect of a four or five star hotel, something you would not find with the purchase of timeshare. Many fractional resorts provide services such as a concierge to help you make plans during your visit, stocking your refrigerator before your arrival, and making sure your personal belongings are placed in your residence for you.

The more expensive the property and exclusive the location, the more fractional ownership makes sense. Purchasing an oceanfront home in some locations could cost you as much as 2 million dollars. Owning a fraction of the same property could be around two hundred thousand dollars minus the mortgage, maintenance, insurance and taxes for a home you don’t use more than a few weeks a year. However, fractional owners are expected to pay a yearly fee that covers things such as concierge service, cleaning and general property upkeep.

“Studies by Ragatz Associates have told us that fractional resales have typically appreciated at a pace similar to second homes in an area,” said Allison Pope, marketing manager for ICI Homes in Orlando. “Fractionals are deeded properties and most owners don’t just own a week or two as many do with timeshares. The vast majority of fractional ownership buyers aren’t real estate investors; they just want a getaway without all of the hassles of second home ownership.”

ICI Homes is just one of many companies jumping on the fractional ownership bandwagon. They currently have two projects underway in Orlando that offer a combined 1,470 fully furnished condo and town home units. There are a handful of companies such as Ritz Carlton and Four Seasons who construct and manage fractional ownership vacation condos and homes around the world.

I thought I could write one article on fractional ownership, but then discovered this is a vast topic that will be much easier for readers to comprehend through a series of articles. Stay tuned for the next two articles in this series. In the meantime, check out these sites to learn more about fractional ownership.

www.vacationownership.com
www.heliumreport.com
www.luxuryfractionalguide.com

Read Part Two: Financing Your Fractional Ownership Purchase