Fractional Vacation Home Ownership
If you could spend the same amount of money would you rather have one Vacation home or be able to have multiple parts of different vacation homes? Multiple, right? Fractional ownership is becoming quite a trend in the vacation resort areas of our country. So many people want to be able to enjoy everything tha Sullivan’s Island and Isle of Palms have to offer. To do this they turn to fractional ownership.
“As a fractional owner, you actually become a co-owner of a vacation property; you split the purchase price, maintenance and taxes with your co-owners, as well as the property’s appreciation down the road.”
The advantages of fractional ownership are numerous:
• Investment diversification. You don’t have to bear the full financial burden of a holiday house you will likely only use a few weeks a year.
• Buying power. You may be able to buy a far more desirable property or in a better location than you could have afforded alone.
• Location. With a do-it-yourself fractional, you’re not tied to properties on the tourist strip, and may opt instead to buy in a more desirable — and affordable — neighborhood.
• Culture cushion. Split the obstacles of setting up house in a foreign country among the group — or better yet, buy into an already established fractional in your country of choice.
• No rental headaches. Although some groups do allow its owners to rent out their allotted time, others prohibit it, as do certain locales.
• Equity participation in the property’s likely appreciation.
• Control over the ownership, maintenance, even the décor.
• Travel diversification. Flexibility to co-own homes in several locations rather than being tied to one.
• Business expense. Want to reward your employees, woo your clients and write off part of your fractional? You may be able to if you use it for business.
he disadvantages are few but can be significant. Though their number is growing with demand, there are still relatively few lenders willing to finance the purchase of a fractional. All kinds of financial foibles can arise if you fail to carve the terms of your fractional in stone with the help of an attorney familiar with the nuances of this emerging field. The pro rata shares may add up to more than what the property would have cost a single buyer. Be as careful in selecting a vacation fractional as you would your own home, since there is no guarantee it will hold its value, even in a resort location.
Baby boomers lead the way
Sirkin says fractionals reflect the changing lifestyles of baby boomers who want to either recoup some of the outlay on their little-used vacation home or diversify their vacation destinations without having to sell the place or, worse, rent it.
Ownership and control
If this all sounds a little familiar, it should. In fact, perhaps the biggest hurdle facing the emerging fractional industry is that it is frequently confused with your parent’s version: the time share.
Two things separate the fractional from the time share: ownership and control. With a time share, you typically bought the use of a property for two or three weeks a year; there was no ownership in the property itself and you had little, if any, control over when or where you stayed. With a fractional, you are actually a co-owner of the property, either by deed or, as is often the case with foreign fractionals, as a shareholder in a nonprofit business entity such as a partnership or limited liability company. Although deeded ownership does not guarantee you any particular level of control per se, it does provide the opportunity to incorporate that into your governing documents.
So please take time to think about this wonderful way to purchase and enjoy a piece of Vacation property here on Isle of Palms, Sullivan’s Island or Wild Dunes. Please click here to read the full article.
Please call me if you have any questions about fractional ownership. I look forward to hearing from you!
Elizabeth Whittle
REALTOR
(843) 901-0488
EWhittle@carolinaone.com
www.ElizabethWhittle.com
The thoughts on this website do not necessarily reflect those of Carolina One Real Estate.
Carolina One Real Estate | 877-663-3456
1400 Palm Blvd Suite E, Isle of Palms, SC 29451
info@palmettobeaches.com