The benefits of fractional ownership in private residence clubs

A new way to own a holiday home – for a few: Partial ownership of holiday homes, also called private home clubs, is a relatively new concept that allows you to enjoy four to 12 weeks of home ownership entitlements per year in a luxury resort, but at a fraction of the cost of ownership.

If you want to own an impressive second home with personalized services and located in an expensive recreation area, but you can totally justify spending because you will only use it for a few weeks or months of the year, this type of property arrangement can appeal to you.

Equipment Galore

Most private residence clubs offer extensive amenities. These may include an extravagant clubhouse and spa, plus five-star hotel services you would not expect in a wholly owned holiday home, high-end apartment or timeshare.

Imagine this: Going on vacation and calling ahead to the staff at your home in a private residence. At your request, employees buy your groceries, clean your clothes, make reservations for your restaurant, heat up your private splash pool, and place knick-knacks and favorite pictures of family members around your home. At the airport you will be met by an employee who will take you to your home, where you will find a detailed Jaguar that you can use at your parking space.

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

Excellent location

Faction or residential clubs have appeared in exclusive world destinations. Sao Tome, Virgin Islands, Puerto Vallarta and Mexico are popular places.

In the United States, the first factional factions were in the West's large ski areas, especially in Colorado, where the property was so expensive that wholly owned second homes were excluded for most people. Eventually they spread to the northeastern ski areas. Since then, fractionals have emerged in golf communities such as Hilton Head Island, South Carolina, and popular beach states like Florida.

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

Management by five-star companies

The key to the success of the factionarians is their professional management. Most of them are run by renowned hospitality companies known worldwide for their resorts. Among them are Ritz Carlton, Four Seasons, Starwood, Intrawest and Millennium, brands known for their five-star service and amenities.

Seamless ownership

Part of the call of the factionaries is that they are completely trouble-free. In addition to personalized service staff, private residence clubs never have to worry about repairs, maintenance or cleaning. Everything is included in the price and annual fees and taken care of by a professional management company.

Potential of awards

To date, there has been very little fractional development of resorts. Demand is high. As a result, it is likely that significant recognition will take place rather than depreciation, which usually occurs in timeshares.

Real estate experts say that the outlook for investment appreciation seems excellent. You can expect at least an appreciation parity against other properties in the recreation area where the fractional part is located.

Prices

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

What costs fractional? Prices vary depending on the size, equipment and location of each property. Most of them, however, range from $ 100,000 to $ 500,000. Keep in mind that these are truly high-end houses that would cost you two to five times as much if they were purchased directly as completely holiday homes.

Comparison of factions with timeshare

How do fractionsals compare to timeshars? Not really. Fractional elements are much more exclusive and include much more luxury facilities and services than timeshares. They tend to be larger houses, usually three to five bedrooms. Timeshares usually allow you to use only one to two weeks per year. Fractional offers from two to 13 weeks and these are not necessarily consecutive weeks. Select the weeks you want.
When it comes to financing, it is difficult to get a loan from a bank or a timeshare mortgage. Prices are high no matter how good your credit is. This is because it is a well-known fact that most timeshars are devaluing over time. Conversely, banks and mortgage companies regard a fractional amount as an asset and often treat it as any other house purchase.

Why do factional tend to appreciate while timeshares usually write off? There are several reasons. With factions, more buyer dollar goes to high quality finishes and "bricks and mortar" vs. sales commissions, which can be up to 40% to 50% with limited time sharing.
Moreover, timeshare values ​​have been historically weak due to the large number of sales on the market, not to mention the constant flow of new developments. The fact is that the secondary market for timeshares has never really developed.

Conversely, there is a limited number of factions on the market. Most likely, this number will remain small, since fractions are only built in the best and most desirable locations. Therefore, demand exceeds supply and leads to property valuation.
Comparison of factions with hotels

Faction (private residential clubs) differs from apartment hotels in that you have a set amount of time to use your holiday home. Condo hotels are actually condos located in hotels. You can use your unit whenever you want and put it in the rental when not in use. Fractionals do not offer participation in the rental program.

Fractions tend to be larger than most housing units. Most factions offer three to five bedrooms, while most housing units are studios, one bedroom or two bedrooms. Currently, most apartment hotels are located in Miami and other surrounding cities in South Florida. Fractions are most prevalent on the West Coast, especially in ski areas. However, both types of properties are rapidly gaining popularity, and there is likely to be more supply across the country to meet growing demand.