 | Daily Real Estate News | May 26, 2006 |
With Fractional Ownership, You Have Many Options
Fractional ownership, sometimes referred to as interval ownership, is increasingly popular among buyers today. But it can mean many things, from sharing a small townhouse in a regional resort, to having an exclusive condo hotel in a vacation hotspot.
Typical fractional ownership is one-fifth interest, which equals nine or 10 weeks of annual ownership, usually in a moderately expensive property. Here are some of the other forms of interval ownership that you may encounter:
- Traditional fractionals: Typically, town houses or two- to three-bedroom apartments of average quality in regional resorts. Owners receive a deeded interest for a limited period of time.
- High-end fractionals: Larger units, with lower-density, better-quality finishes and furnishings, and additional services in a more desirable location.
- Private residence clubs: Prime sites in top-tier resorts with lots of amenities. Intervals tend to be longer, with a lower member-to-property ratio to create exclusivity.
- Destination clubs: Analogous to high-end country clubs, with overnight accommodations in a network of resort homes or properties in prime destinations. Sometimes, membership is deeded to a percentage of the entire real-estate portfolio. In other instances, members are conveyed access to the properties via nonequity, right-to-use club memberships.
- Condo hotels: Whole ownership of a room or suite that can be used whenever the owner wants and rented by the hotel when it is not in personal use. The hotel takes 40 percent to 60 percent of the revenue, with the owner or owners sharing the rest.
Source: United Feature Syndicate, Lew Sichenman (05/21/2006)
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