Trading Places: The Benefits of Co-Owning a Vacation Property
Owning a fractional can pay big dividends – and not just in cash
While the dream of owning a vacation home may sound appealing, the year-round responsibility may turn your dream into a nightmare. Whether it’s unexpected costs, the strain of keeping up two properties, the demands of your growing – or shrinking – family or inflexible holiday schedules, research says that most second homes are vacant 85 per cent of the year.
But what if you could share that home – and the costs! – with like-minded people? Maybe throw in a manager to oversee the day-to-day details of ownership. Or go whole hog with an affiliation with a respected hotel group and have access to fine restaurants and upscale facilities? The dark shades fade, and today’s fractional ownership is revealed.
But the spectre of time-share scams – which offer incentives to lure prospective buyers into attending high-pressure sales presentations to “own” a week in the sun at “bargain rates” with the “company” often out of business in just a few months –still hovers. When I asked my neighbour to witness my signature on an offer to purchase a fractional cottage, she was horrified. “Please don’t!” she begged. “It’s shady, and you’ll lose your money.”
But time-shares have morphed into a more credible and sophisticated investment of fractional ownership with infinite options – from buying a vacation home with friends to private residence resort clubs offered by Ritz-Carlton, Hyatt, Marriott, Four Seasons and Fairmont.
While traditional time-shares typically had 52 owners per unit with each owner offered one week a year, fractionals involve two to 10 owners who visit more frequently, maintaining pride of ownership and strong resale value. At William’s Landing in Haliburton, Ont., where my husband and I are co-owners, 18 cottages are scattered over 47 wooded acres with 3,000 feet of shoreline on Lake Kashagawigamog. As 1/10th owners, we enjoy five weeks a year at the lake – one fixed week and one in each of the other seasons.
For those who want no management responsibilities but like the idea of unit-specific, deeded and equity-based ownership, Resort Owners Group (ROG) offers luxurious fully managed properties across North America (Mt. Tremblant, Que., Rossland, B.C., two developments in Florida and one under development in Muskoka).
Flexible purchasing allows whole owners (eight shares) to get 40 weeks annually, half owners 20 weeks, quarter owners 10 weeks, 1/8th owners five weeks with prices for some cottages and chalets around $60,000 and annual fees of about $5,000.
ROG retains 10 weeks of the property (two weeks are set aside for maintenance and repair work). In addition to their purchased share, owners have another full 10 flex weeks that are not specific to their unit. Selling or downsizing to fewer weeks is handled through ROG; its liquidity works to the owner’s benefit. Founder and CEO Gary Carter also refers to “stack, rack and roll”: stack your weeks booking multiple homes at the same location for an extended family vacation; rack your weeks in a row for a longer vacation; roll your week to another resort. Yours may be a $60,000 investment, yet you may have “rolled” into a million-dollar home in Whistler or the Bahamas (ROG is associated with Intrawest Resort 2 Resort exchange program).
With its high return on investment and return on enjoyment, Carter calls ownership in ROG “a mutual fund you can sleep in” – a unique model of resort home ownership that has been trademarked as OwningSocial.
The last decade has seen the growth of private residence clubs that offer access to a collection of five-star vacation homes around the world in exchange for a one-time membership fee and annual dues. They can be non-equity clubs, where members enjoy the benefits but don’t own any interest in the homes and so are not impacted by the real estate market or the financial portfolio of the club, such as Exclusive Resorts.