Fractionals - Frequently Asked Questions


Fractional Ownership

In a nutshell, the concept of fractional (shared) ownership is to divide the purchase cost and maintenance of a property into segments which match the amount of time an owner desires each year at the home.

Maintenance and schedule coordination are provided by a management company.

Owning your own vacation home has never been easier!

Benefits of Fractional Ownership:

Pay only for what you use. Instead of paying $2M for a home used occasionally, you can buy ownership shares for the amount of vacation time you want. Purchase 10% (5 weeks per year) or 20% (10 weeks) in a deeded fee simple share.

Expenses are shared amongst owners (taxes, insurance, utilities, etc).

1.  What are fractionals and are they the same thing as private residence clubs?
Fractional ownership of condos and vacation homes, also called private residence clubs, allows you to enjoy up to three months of home ownership privileges at a top-of-the-line, luxury resort but at a fraction of the cost of whole ownership. 

2.  Who are fractionals really for?
This type of real estate arrangement is ideal if you want the benefits of owning an impressive second home located in a very exclusive community but can't justify the investment because of limited use.

3.  How long is a typical fractional share?
Traditionally, each property is divided between four (most common) or eight owners.  The calendar year is divided between the owners and rotated accordingly. 

Because there are far fewer owners of each individual property than say your typical timeshare, you'll have a lot more options regarding when you can use the home.

4.  Where are some of the services I might expect from a fractional ownership or private residence club?
You will receive the same services individual owners receive at the resort/development for you wish to purchase.

5.  Where are fractionals located?
Fractionals or residence clubs have sprung up in exclusive, world-class resort destinations worldwide.  St. Thomas, Virgin Islands, Puerto Vallarta, Mexico are popular locations.  In the U.S., the first fractionals were in major ski areas out west, particularly Colorado.  Eventually they spread to northeastern ski areas. 

Since then fractionals have begun appearing in golf-oriented communities like Hilton Head Island, South Carolina and popular beach states like Florida. 

6.  Who manages the fractionals?
Every resort is managed by a professional property management company.

7.  How do fractionals differ from time shares?
Fractionals are far more exclusive and include many more luxury amenities and services than timeshares.  They tend to be larger homes, usually two to five bedrooms. Timeshares are typically for one to two weeks per year.  Fractionals typically offer 6 - 12 weeks, depending on the number of owners.

Financing a fractional with a bank or mortgage company loan is easier than financing a timeshare.  That's because timeshares are looked upon as assets that depreciate while fractionals are considered appreciating assets.  Most lenders treat the purchase of fractionals like they would wholly-owned second homes.  However, in Mexico, typically most transactions are consummated via cash or seller financing.  This could vary per transaction.

Finally, there are a limited number of fractionals on the market, unlike timeshares which are more common.  Most likely the quantity of fractionals will stay small because of the emphasis placed on building in only the very best, most highly desirable locations.  The result is that demand outpaces supply, resulting in appreciation and good resale potential, neither of which timeshares can offer.

8.  How do fractionals differ from condo hotels?
Both offer luxurious accommodations and services for the person seeking a vacation home.  The condo hotel, however tends to be an individual room or suite located within a major hotel.  Fractionals can be condos, townhouses, or single-family homes located in an exclusive community.

9.  Why should I buy a fractional instead of a wholly-owned second home?
Most people who buy a fractional recognize that they won't be spending more than a couple of months a year at their vacation home.  With a fractional you can get the quality and level of luxury you want and only pay for the "fraction" of time you actually plan to use the home.  And you never have to be concerned with finding renters for the months you're not there.

Also, keep in mind that included in the sale price and annual fees of a fractional is all your maintenance, upkeep and housekeeping.  Fractionals are 100% hassle free!

10. Can you trade or rent out your time?
In most cases, yes, but you'll, of course, want to check the specific guidelines for the property you're considering.  Most fractionals also participate in a reciprocal usage program similar to timeshares in which you can trade weeks and locations.

11.  Can more than one individual or family own a residence interest?
At most properties, the answer is yes.  In addition, the extended family of the owner including children, grandchildren, siblings and parents can use the residence and are entitled to the membership privileges.

Articles and press about fractional home ownership.

Fractional Ownership
by Carley Dangona
The Bend Bulletin - June 6, 2007

Fractional Real Estate: All the Luxury at a Fraction of the Cost
by Sarah Lawrence
Cascade Business News - May 16, 2007

Fractionals: A Warm Spot in a Cooling Market
By Kristina Shevory
The New York Times - April 13, 2007




Design by: Proincomanticoreproject.com

LiveZilla Live Help