Have you ever wanted to live the lifestyle of the rich and
famous (without the paparazzi and the National Enquirer)? Not
the
”
I have enough in my checking account to cover the bills
”
existence, but the
”
I think I’ll call the driver to take me down to the boat
”
sort of experience.
Have you ever wanted to live the lifestyle of the rich and famous (without the paparazzi and the National Enquirer)? Not the “I have enough in my checking account to cover the bills” existence, but the “I think I’ll call the driver to take me down to the boat” sort of experience.
Imagine life where nothing ever wears out, all the housekeeping is done for you, someone is on staff 24 hours per day to take care of your every whim. Way beyond us, right?
Probably. It’s probably not a lifestyle most of us will have in our lifetime, and not even one to which we’d necessarily aspire. But perhaps it would be fun for four weeks a year.
It’s possible. There is a concept in real estate ownership called fractional ownership, and I suspect we’ll see more and more of this as time goes by.
Let’s look at an example. (All you ski bums in the back, sit up and listen.) Imagine you think it’d be fun to have a rental property at Lake Tahoe. You’re looking at prices, and gasping for air. If you can scrape together the bucks to buy one, you feel obligated every time you have a free second to go there to “get my money’s worth.” Then you want to rent it out to cover the expenses but, whoa doggies! The general public wants the darn thing the same times you do. Finally, someone leaves the place without winterizing it and the pipes burst and… well, we can draw the curtain here but you get the point.
So you come up with a better idea. You get together a group of trusted friends. You buy a property as tenants in common and furnish it nicely. But one of you has a rowdy dog and another rowdy kids and Ken loses his job and Margarita has allergies and Jackson wants to hang a bear head on the wall while Mimi wants garish silk flowers on each bathroom vanity and you all want the place over Thanksgiving. You end up with no friends.
What’s an investor to do? You might want to consider fractional ownership. “Now what in tarnation is that gal talkin’ ’bout now?” Here it is in a nutshell: fractional ownership is a reasonable alternative to traditional second home ownership. You own an undivided fractional fee-simple interest in a specific property. You are buying your vacation home in partnership with other owners who share the cost with you, but it’s on a much larger scale than a few friends and the problems associated with those personalities are mitigated.
Fractional ownership is a real estate purchase; you only purchase a fraction of the property instead of the whole property.
Let’s look at one such development, the 80/50 Northstar. You purchase 1/12 of a condo in a development. You get two preplanned weeks in the summer and two weeks in the winter. Beyond the preplanned vacation time you can reserve time whenever it is available, though you can only have one reservation on the books at a time. There is no additional cost for this.
Each unit is professionally decorated by KNA Design using elements such as slate, fieldstone, leather and copper to create a rustic elegance. If another owner damages a couch, it is replaced immediately with an identical one. You can arrange for pre-arrival grocery shopping. When you arrive, your personal items such as pictures, clothing, exercise gear, etc. is pulled out of storage and put in your unit! (I think that’s way cool.) Cleaning services are, naturally, included. There’s a sauna and spa, ice-skating rink, tennis and swimming, shops and restaurants. Hmmm. I could probably get used to that.
People buy fractionals (even when they can afford the entire purchase) to reduce the building expense and responsibility of ownership. Then the second home is truly a vacation because you go there and everything is taken care of for you. At the same time, you have the deed to the property. You get all the tax benefits of owning real estate.
There are many developments. Some of the fractional developments also participate in global vacation exchange clubs like the Disney Vacation Club. This offers the ability to travel elsewhere for vacations, while still maintaining the fractional ownership of your own property.
Many of the fractional developments are in other high-end resort locations such as Jackson Hole in the Tetons, where condominium or property ownership is priced at the high end. Again, the fractional owner has access to all the amenities in the resort area, while paying substantially less to get in.
Okay, Nants, cut to the chase. What’s something like this cost? Let’s just look at Northstar again. The villas range from one to three bedrooms, and at this time range from the mid-$200,000s to just about $400,000. There are homeowners’ association fees that include maintenance, housekeeping, valet and concierge services. There is also a surplus amount so the area is maintained at the level of a five-star resort. The fees range from $4,000 to $8,000 per year, paid quarterly.
Interested in fractional ownership? Call your Realtor. (Make sure he or she has bought or sold them before.) And be kind to your Realtor!
