What Makes Fractional Shares Different from Owning Other Kinds of Vacation Properties?

Fractional shares ("fractionals") are sometimes confused with other vacation property options, such as time shares and condo hotels. While there are similarities, there are a number of things that make fractional shares unique, and thus suited for a certain type of vacation property buyer.

Fractionals, also referred to as private residence clubs, are similar to condo hotels in that they can be put into a rental pool when the owners are not using the property. Also, fractionals are considered a second home purchase with interest and equity benefits that go along with ownership. But unlike a condo hotel, fractionals are typically luxurious private homes located in the most exclusive areas.

Although they are available in studio and one-bedroom units, most are larger with several bedrooms, family rooms, pools, decks and outdoor recreation areas, and a host of other features that make them exclusive properties. A fractional property would be out of the price range of most individuals, but because ownership of the home is divided between a small group of people, this upscale lifestyle becomes affordable.

Typically fractionals are split in 4 to 8 shares, which means that arranging time at the property is less competitive than other types of shared ownership properties. There is no requirement that you have contact with the other owners, but many do develop friendships or at least get to know each other at annual ownership meetings. How involved you want to be with the other owners is up to you.

Even those that could afford to purchase a million dollar vacation home may only be able to use the property for a total of a month or two during the year and might feel that it is not a wise investment. Fractionals allow owners to decide how often they want to use the property, with packages ranging from two weeks to three months (not consecutively). Prices vary accordingly.

This is an ideal situation for those who enjoy staying at quality lodging when on vacation and prefer to put money toward their own investment, rather than putting that money into the pockets of a hotel chain or resort management firm. When you own a fractional, you can rent it out yourself or offer it to friends and other family members. And if you decide that you want to sell your share of ownership, you are free to do so at any time. Or you can will it to your children or other designee.

Fractionals first became popular in the posh ski resorts of Colorado and Utah and beach communities of California and the Caribbean but have spread to other areas of the country, including Florida. In fact, fractionals are the fastest growing sector of the timeshare industry, growing over three times faster than the industry as a whole

One of the reasons they are so popular is because since you purchase deeded ownership to your share of the property, banks offer more favorable financing for fractionals than for other shared ownership options, often treating them as second home purchases. Because there are far fewer fractionals available than timeshares, their value tends to increase, making them a better bet for banks to finance.

Another benefit of fractionals that makes them popular to buyers is that many of them come with an option to upgrade to a larger residence if one is available. And some fractional properties are owned by organizations with units in other parts of the country or world, and they will allow you to transfer your scheduled time to one of these other properties. So you may own an oceanside unit in Florida, but can spend a weekend skiing in Aspen, while staying in the same luxurious comfort, often for no additional cost.

And with a fractional, you don't have to worry about maintenance, repairs, or other ownership responsibilities that can get overwhelming with a second home. All of these services are included in your annual maintenance fee, which is similar to membership fees paid by those who belong to a homeowners association or gated community.

Many fractional properties are managed by lodging and hospitality experts like Ritz-Carlton and Four Seasons. This ensures that your property will be well maintained and offer the best in guest services and amenities. And if you have the option of placing your unit in a rental pool on a rotating basis, the reputation and sales clout of the management company increases the likelihood that the unit will be rented.

Perhaps the biggest appeal of fractionals is the personal service you receive from the staff. Prior to arriving, they will ready the residence for you, decorating the home with photos, artwork, books, DVDs, bedding and other personal items you keep in storage. They will purchase food according to your instructions and add a hide-a-bed or crib if needed. Everything is ready for you when you get there.

If your home is located in a resort community or luxury hotel property, you also receive the services and amenities that go along with the location. This often means access to golf courses, marinas, spas, and other desirable extras. All of this comes at an average price of $100,000 to $500,000 depending on the total sale price of the home, the number of weeks in your package and the number of other owners.

There are many benefits and perks that come with fractional shares, but they can come at a hefty price. Make sure it's right for your budget. If not, there are other vacation property options that may suit your needs.

For more on finding and buying fractional shares, check out Make Your Next Home a Resort, the 2005 Guide to Condo-Hotels, Fractional Shares and Resort Residences. You can download the Guide as a pdf file at http://www.InvestingIN.com/realestate/resorts/resort4u.htm

Leon Altman is the founder of the InvestingIN Real Estate Letter - http://www.InvestingIN.com/realestate/Lt rSignup3.htm - and its parent website, http://www.InvestingIN.com - a website that provides articles and newsletters about opportunities in different areas.

---

Real Estate Investing Works In Your Area Too!

I hope you had a spectacular weekend!Things have been going... Read More

Home Loans ? Identity Theft Protection Could Hurt Home Sales

Identity theft has been a hot topic in the news... Read More

Writing on the Wall - Are REITs a Better Investment for You?

When I was a young child I had many annoying... Read More

Refinancing Your Home Loan? When Should You Refinance Your Home?

If you have a current mortgage and are unhappy with... Read More

Minneapolis Warehouse Loft

Downtown Minneapolis is rich with true metropolitan charm. With the... Read More

Kings Bay Georgia Real Estate - An Amusing Tale About a Real Estate Agent

This story is true and not meant to hurt anyone,... Read More

Is An Old Home for You? ? The Pros

If you prefer a home that is unique and has... Read More

Sell your Property Faster

Learn how to sell your property faster and at the... Read More

Helpful Hints for First-Time Home Buyers

Buying a house can be a daunting task, even for... Read More

Law & Logic of Homeowner Association Capital Reserves

In October 1999, Oregon was one of the first states... Read More

Good Tenants - Learn Twelve Ways Landlords Keep Them

Happy, Long-term Good Tenants Paying On Time How to Create... Read More

Thinking About Selling Your Home?

Owning a home is the original American dream. It's the... Read More

Conversation & The Real Estate Investor

One key that makes investors is conversation or should I... Read More

Dont Just GET THE DEED - The Infamous Kitchen Table Closing

Q: Hi Lou, I have a property under contract that... Read More

How to Get Financing after Filing Bankruptcy

If you're thinking about buying a home but have declared... Read More

Business Credit Card Dirty Tricks

My system teaches people that the proper use of credit... Read More

Selling Your Home: The Power of a Great Sales Flyer

Even though its importance is often overlooked, a great sales... Read More

Realtors Brainstorm For Business

Even though rates are down opening up the market for... Read More

Popping The Real Estate Bubble Myth!

If you turn on the TV, listen to the radio,... Read More

Find Bucks in Yucks! 20-Year-Old Woman Turns Doghouses into Dollars!

Do you dream of making money in real estate? Do... Read More

Your Home Equity Can Work for You

"Use your home's equity to pay off your debt. It's... Read More

Real Estate: The Consumers Will Have The Final Word!

"The first step toward change is awareness. The second step... Read More

Successful Real Estate Investing

One of the best roads to wealth in America has... Read More

Real Estate Internet Marketing Is The Way To Go

Real estate Internet marketing is a booming business, along with... Read More

Home Staging: How to Make Your Tract Home Stand Out in the Crowd

Home sellers who wish to market their property in development... Read More

Real Estate Investment - Why it is Big Business?

When examining the different asset classes, real estate is generally... Read More

The Art & Science of Property Valuation -- Automated Valuation Models

It is no secret that sellers want to sell high... Read More

Real Estate Bubble: Sophisticated Musical Chairs?

The real estate bubble is a hot topic today; annual... Read More

Types of Listings with Agents

There are several different types of listing contracts. Few of... Read More

Real Estate Investing Is A Better Gamble Than The Lottery

Real estate investing begins when you move to the starting... Read More

What Can I Realistically Earn In A Lease Purchase Business?

If you're looking at Lease Purchasing as a business, you'll... Read More

Joint Ventures In Real Estate Development; So How Do They Work?

There are many reasons why you would consider joining with... Read More

Expense List for Buying a Home

There are many expenses that come with buying a home.... Read More