The benefits of fractional ownership in private residency clubs

A new way to own a holiday home – for the select few: Fractional ownership of vacation homes, also called private residence clubs, is a relatively new concept that allows you to enjoy four to 12 weeks of home ownership per year at an exclusive, luxurious resort, but at a fraction of the cost of the entire ownership.

If you want to own an impressive second home complete with personalized services and located in an expensive resort area but can't justify the expense because you only spend it a few weeks or months of the year, this type of real estate scheme may appeal to you.

Amenities Galore

Most private housing clubs offer extensive amenities. These can include an extravagant clubhouse and spa, plus five-star hotel services, the kind you wouldn't expect to have in a 100% owned vacation home, high-end condo, or timeshare.

Imagine this: You are going on holiday and you are calling the staff of your private home club. At your request, staff shop for your groceries, clean your clothes, make your restaurant reservation, heat your private splash pool, and place knick knacks and favorite photos of family members around your residence. You will be met at the airport by an employee who drives you home, where an equally detailed Jaguar sits in your parking lot for use at your disposal.

Get the picture? Private residence clubs are NOT your ordinary second home.

Outstanding locations

Fractional or residency clubs have emerged in exclusive world-class resort destinations around the world. St. Thomas, the Virgin Islands, Puerta Vallarta and Mexico are popular places.

In the United States, the first fraction of large ski areas was west-west, especially Colorado, where real estate was so expensive that the wholly-owned second home was out of the question for most. Eventually, they spread to the northeastern ski areas. Since then, fractals have begun to appear in golf-oriented communities such as Hilton Head Island, South Carolina and popular beach states such as Florida.

Some of the most popular fractional can be found in Jupiter, FL; Aspen Highlands, Bachelor Gulch and Aspen Snowmass, CO; Lake Tahoe, California; and Whistler, British Columbia. Fractional located in the United States usually offers good access to major airports, allowing for easy transportation.

Management of five star companies

The key to success for fractional is their professional leadership. Most are run by respected hospitality companies known worldwide for their world-class resorts. Among them are the Ritz Carlton, Four Seasons, Starwood, Intrawest and Millennium, brands known for their five-star services and amenities.

Seamless ownership

Part of the appeal of fractional is that they are completely hassle free. In addition to having a personal service staff available, in a private residence club, you never have to worry about repairs, maintenance or cleaning. Everything is included in the price and annual fees and is taken by the professional management company.

valuation Potential

So far, there have been very few fractional resort developments. Demand is high. As a result, it is likely that there will be a significant strengthening rather than the depreciation that usually occurs with timeshares.

Real estate experts say the outlook for pricing seems excellent. At least you can expect an appreciation parity over other properties in the resort area where the fraction is located.

prices

To buy a fraction, you pay a one-time purchase price and then an annual maintenance fee that covers all expenses associated with real estate and its use and services.

How much does it cost? Prices vary depending on the size, amenities and location of the individual property. But most are in the $ 100,000- $ 500,000 range. Keep in mind that these are really top-of-the-line houses that will cost you two to five times as much if you buy directly as a wholly owned vacation home.

Comparing fractions to timeshares

How is fraction compared to timeshare? They really don't & # 39; Fractional is far more exclusive and includes many more luxury amenities and services than timeshares. They tend to be larger houses, usually three to five bedrooms. Timeshare usually allows you to spend only one to two weeks a year. Fractional offers from two to 13 weeks and these do not necessarily have to be consecutive weeks. Choose the weeks you want.
In terms of financing, getting a bank or mortgage on timeshare is difficult. Prices are high no matter how good your credit is. This is because it is a well-known fact that most timeshares are depreciated over time. Conversely, banks and mortgage lenders consider fractions to value assets and will often treat them like any other home purchase.

Why do factionists tend to value while timeshares are usually depreciated? There are a couple of reasons. With fractionations, more of the buyer's dollar goes for high quality finishes and "bricks and mortar" compared to sales commissions, which can be as high as 40% -50% with timeshares.
In addition, timeshare values ​​have historically been poor due to the large number of resale in the market, not to mention a continuous stream of new developments. The fact is that the secondary market for timeshares has never really developed.

Conversely, there are a limited number of factions on the market. Most likely, this number will remain small because the fraction is only built on the very best and most desirable locations. Therefore, demand increases supply and results in valuation of property.
Comparison of fractional to condo hotels

Fractional (private residence clubs) differ from condo hotels in that you have a specific period of time when you can use your vacation home. Condo hotels are actually condos located within hotels. You can use your device whenever you want and place it in the rental program when you are not using it. Fractional does not offer participation in rental program.

Fractional tends to be larger than most condo hotel units. Most fractional offer three to five bedrooms, while most apartment hotels are studios, one bedroom or two bedrooms. Currently, most condo hotels are located in Miami and other surrounding cities in South Florida. Fractional is most prevalent on the west coast, especially in ski areas. However, both types of real estate are gaining popularity quickly and soon there will likely be more supply across the country to meet the growing demand.