A New Way of Vacation Home Ownership – For a Selected Few: Fractional vacation home ownership, also called private residence clubs, is a relatively new concept that allows you to enjoy four to 12 weeks of home ownership privileges per year at an exclusive luxury resort, but at a fraction of the cost. total cost of ownership.

If you want to have a stunning second home complete with custom services and located in an expensive resort area, but can’t justify the expense because you’ll only use it a few weeks or months out of the year, this type of real estate arrangement may appeal to you.

amenities galore

Most private residential clubs offer extensive amenities. These can include an extravagant clubhouse and spa, plus five-star hotel services, the kind you might not expect in a wholly owned vacation home, luxury condo, or timeshare.

Picture this: You go on vacation and call ahead to the staff at your private residence clubhouse. Upon request, staff shop for your groceries, dry-clean your clothes, make your restaurant reservations, heat your private pool, and place trinkets and favorite photos of your family members in your residence. A member of staff will meet you at the airport and drive you home, where a newly detailed Jaguar sits in your parking space for your use at your disposal.

Get the image? Private residential clubs are NOT your ordinary second home.

Featured Rentals

Residential or fractional clubs have sprung up in exclusive world-class tourist destinations around the world. St. Thomas, the Virgin Islands, Puerta Vallarta, and Mexico City are popular locations.

In the US, the first subdivisions were in the major western ski areas, particularly in Colorado, where real estate was so expensive that wholly owned second homes were out of the question for most people. They eventually spread to the ski areas of the Northeast. Since then, fractionals have begun to appear in golf-oriented communities like Hilton Head Island, South Carolina, and popular beach states like Florida.

Some of the most popular fractionals can be found in Jupiter, FL; Aspen Highlands, Bachelor Gulch and Aspen Snowmass, CO; Lake Tahoe, CA; and Whistler, British Columbia. Subdivisions located in the US generally offer good access to major airports allowing for easy transportation arrangements.

Management by Five Star Companies

The key to the success of fractionals is their professional management. Most are operated by well-respected hospitality companies known throughout the world for their world-class resorts. Among them are Ritz Carlton, Four Seasons, Starwood, Intrawest and Millennium, brands known for their five-star services and amenities.

Hassle Free Ownership

Part of the appeal of fractionals is that they are completely hassle-free. In addition to having a staff at your disposal for personalized service, in a private club residence you will never have to worry about repairs, maintenance or cleaning. Everything is included in the price and annual fees and is handled by the professional management company.

Appreciation Potential

To date there have been very few fractional tourist developments. The demand is high. As a result, there is likely to be substantial appreciation, rather than the depreciation that typically occurs with timeshares.

Real estate experts say the prospects for investment appreciation look excellent. You can expect at least par appreciation against other real estate in the resort area in which the fractional is located.

Prices

To buy a fractional, you pay a one-time purchase price and then an annual maintenance fee that covers all expenses associated with owning the property and its use and services.

How much do fractionals cost? Prices vary based on the size, amenities, and location of the individual property. But most are in the $100,000 to $500,000 range. Keep in mind that these are truly top-of-the-line homes that would cost you two to five times more if you bought them outright than wholly owned vacation homes.

Comparison of fractionals with timeshares

How do fractionals compare to timeshares? They really don’t. Fractionals are much more exclusive and include many more luxury amenities and services than timeshares. They tend to be larger houses, usually three to five bedrooms. Timeshares generally allow you to use only one or two weeks per year. The fractional ones offer from two to 13 weeks, and they do not necessarily have to be consecutive weeks. Choose the weeks you want.

When it comes to financing, getting a bank or mortgage company loan on a timeshare is difficult. Rates are high, regardless of how good your credit is. That’s because it’s a well-known fact that most timeshares depreciate over time. By contrast, banks and mortgage firms view fractional assets as appreciating and will often treat them like any other second home purchase.

Why do fractionals tend to appreciate while timeshares tend to depreciate? There are a couple of reasons. With fractionals, more of the buyer’s dollar goes toward high-quality finishes and “bricks and mortar” versus construction. Sales commissions that can be as high as 40%-50% with timeshares.

Additionally, timeshare values ​​have historically been low due to the sheer number of resales in the market, not to mention a continual stream of new developments. The fact is that the secondary market for timeshares has never really developed.

Rather, there are a limited number of fractionals on the market. That number will most likely stay small because fractionals are built only in the best and most desirable locations. Therefore, demand breeds supply and results in property appreciation.

Comparison of fractional hotels with condos

Fractionals (private residence clubs) differ from condominiums in that you have a set amount of time in which you can use your vacation home. Condominiums are, in fact, condominiums located within hotels. You can use your unit whenever you want and place it on the rental program when you’re not using it. Fractionals do not offer participation in the rental program.

Fractionals tend to be larger than most hotel condo units. Most fractionals offer three to five bedrooms, while most condo units are studios, one-bedrooms, or two-bedrooms. Currently, most of the condominiums are located in Miami and other surrounding cities in South Florida. Fractionals are more prevalent on the West Coast, particularly in the ski areas. However, both types of real estate are rapidly gaining in popularity and it is likely that there will soon be more supply across the country to meet the growing demand.