Ask a Realtor: What are the pros and cons of fractional ownership?
On Real Estate
Dear Janet and Tisa: My wife and I love the Vail Valley and are looking at options for buying or investing in some mountain real estate where we can spend portions of the year. We’re not ready to relocate (yet) and would like the flexibility of owning something in the Vail/Beaver Creek area while still being able to afford to travel. Some friends suggested we look at fractional ownership. We are wondering what the pros and cons are for fractional ownership vs. buying a home and renting it out, as well as options in and around the Vail Valley.
— Vacation Real Estate Buyer
Dear Vacation Real Estate Buyer: Your question is very timely. Even before COVID-19, interest in fractional ownership has continued to rise as people, such as your wife and you, explore vacation home options.
Given your interest in also wanting to travel outside the Vail Valley, fractional ownership provides the added benefits of being able to trade your week(s) at premier properties around the world. The trend among hotels at most major resort areas, including the Vail Valley, is to market and sell a portion of their rooms as fractional units. This gives buyers premium properties and locations from which you can choose from for other vacations.
For example, highlights of fractional ownership properties in the Vail Valley include The Timbers, Ritz-Carlton Vail, Sebastian, Four Seasons, Park Hyatt, and Westin. Owners can then elect to use their vacation week(s) or exchange on a vacation exchange network, such as Interval International, which is owned by Marriott Corp This provides you with the opportunity to get into some incredible oceanfront, golf or premier properties at a fraction of the cost of what you would pay as a regular guest.
What it costs
Entry level costs for a fractional unit in the Vail Valley range from $7,000-$15,000 for a one- to two- bedroom condo, depending on the week share and unit location. When you consider the cost of renting a premier location condo in Vail or Beaver Creek, buying a fractional makes this a cost-effective way for people, such as yourself, to enjoy and experience the Vail Valley, as well as other luxury resort properties around the world.
Buying a fractional vs a rental property
To determine whether fractional ownership is right for you, we have a few key questions your wife and you should consider. These include:
- How much time do you want or expect to spend in the Vail Valley?
- Outside of COVID-19 travel restrictions, what other destinations are on your travel list?
- Do you prefer having your own personal furnishings or do you like the flexibility of having this taken care of for you?
- Do you need or are you interested more in having a real estate investment or more flexible vacation options?
- What kind of properties do you like or wish to stay at and what would you spend on an average trip?
It’s important to note that buying a fractional is more about a vacation lifestyle investment than longer term financial return. It is ideal for people who want to stay at a higher end resort properties at fraction of the cost, factoring in the retail rental price vs. the fractional price to own a deeded share. That being said, if you’re looking to spend more time, such as a several weeks to a few months a year in the Vail Valley, then buying a home or condo and putting it in a rental program might make more sense. The latter option is also more conducive if financial gain is also a higher priority.
Best wishes in your search.
Janet Boeser and Tisa Olsen lead the Berkshire Hathaway HomeServices Colorado Properties’ BC Fractionals team of five broker associates. Longtime Vail Valley residents for 30+ and 40+ years, Boeser and Olsen bring more than 50 years’ real estate industry experience to clients. Their expertise includes fractional ownership as well as working with buyers and sellers.For more information about BC Fractionals and ownership opportunities in the Vail Valley, visit http://www.bcfractionals.com or call 970.306.6678.
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