Five facts about fractional real estate

1. The factions are here to stay. Fractional ownership has always been with us. Two or three couples get together to buy a cabin by a clear mountain lake; a group of brothers choose to buy a house by the sea to vacation together or separately; a ski chalet for one group of friends becomes a fall mountain retreat for another. The term “Fractional Ownership” has now been formalized. Last March, Dick Ragatz of Ragatz Associates reported that this luxury component of the share ownership industry achieved more than $1.5 billion in fractional property sales.

Today’s fractional real estate owners have benefited from timeshare lessons learned: are protected with deeds and title insurance, have the ability to obtain consumer loans; they can even resell your property. Every major hotel brand, from the Four Seasons to Starwood to the Ritz Carlton, has committed to Fractional Resort Real Estate. Star Resort Group, a sales and marketing organization in Phoenix, verifies that nearly all mixed-use developments have a fractional component. There is no doubt that this luxury resort real estate permutation works!

two. The most common share for high-end fractionals is a 1/8 share (6 weeks) Fractional properties are similar to second homes; the division of the share ranges between 13 owners per share and a quarter of participation (four owners per unit). However, research shows that most stocks for high-end fractionals are six weeks, depending on location and usage. The beauty of a fractional use plan is another kind of buyer protection. While siblings who bought a house on the Florida Gulf to share often fight over who gets to stay on the 4th of July, fractional ownership can allocate time fairly and equitably.

3. Consumer loans are increasingly available for installment purchases Proof that fractionals are an easily acceptable niche in the market is the growing availability of consumer finance. Mortgages with rates similar to traditional homes are becoming more and more the norm.

Four. Fractional projects don’t have to be far from home to be successful Although many fractional projects are located in exotic destinations like Punta Mita or Cyprus, family vacations by car (or a short plane ride) remain the most popular. Witness the popularity of ski resort destinations like Tahoe’s NorthStar Club (a two-hour drive from California’s Bay Area) or Arizona’s plethora of golf resorts (a short plane ride away). from most of the western US). The idea that a second vacation home is easy to get to makes it usable for many more weeks of the year.

5. The Luxury Resort Real Estate Niche Requires Sales & Marketing Experts The fact that fractionals have clear advantages in the luxury resort real estate market does not mean that they are successful in generating income. This is not timeshare, nor is it full ownership. While a buyer may intuitively want to buy, nagging questions about using a fractional and ongoing annual costs can cancel many sales if not handled with aplomb. Your choice of a team to run sales and marketing is very important. Look for experts who have had experience and have made their own investment in fractional projects