Fractional Ownership
Fractional ownership is an ideal situation for those who enjoy staying at quality property 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 home, 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.
Fractional ownership homes are located in the prime areas of the most attractive travel destinations. Owners have high levels of privacy, control of the property, and can participate in selecting other owners. A fractional home often has fewer than 10 co-owners. Fractional homes are known for their high-end amenities, spectacular design, the quality and uniqueness of the home. Fractional homes are managed by property management companies that also provide concierge services.
The cost of fractional ownership includes an initial investment and the cost of ongoing management. Because the cost is split among a group of owners, it is much more affordable than sole ownership for these high-end vacation homes. Because the unused time is rented, the steady rental income help offset the ownership cost.
Because fractional home ownership hasn't been around long enough, there is no established secondary market. Brand name offerings will fare better. Always subject to selling minority interest.
Destination Club
With Destination Clubs, buyers get access to a portfolio of luxury vacation homes, which can be reserved and used based on availability and priorities in exchange for a one-time upfront membership fee, and annual membership dues. According to Ragatz Associates, Destination Clubs meet three broad criteria: shared access, multi-bedroom residences in multiple destinations, and membership-based, non-equity programs.
Larger Homes
In terms of surface area, Destination Club residences can range anywhere from 1,000 – 5000 sq ft depending on the caliber of the club and the location of the asset. For most leading Destination Clubs, the homes average 3000-3500 sq ft.
Membership Deposits
According to data compiled by leading research firms, Destination Club costs commonly include a one-time fee that can range from $20,000 to $1.5 million. However, the average membership deposit for upper bracket Destination Clubs is $300,000-$400,000.The deposit is typically between 80 and 100 percent refundable should buyers choose to exit the program.
Annual dues
As for the annual dues, they commonly range from $25,000 to $35,000 for upper bracket Destination Clubs. Some Clubs may also charge a nightly fee while guests are in residence.
Talk to an expert 866-650-4334 about how we can help you own a luxury fractional vacation home in your dream destination