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 Is fractional "co-ownership" right for you?

At this point, you must be asking yourself: Is fractional co-ownership right for me?

The following table provides a comparison of the estimated Use and Costs of a typical Fractional Villa property, compared to the same property purchased exclusively.  

Please note, both forms of ownership, offer you the same "typical amount of use for a second home". Fractional Villas allows you to use the property anytime, subject to reservation, with an equal right of possession.  If all owners use the property equally this would equal approximately 45 days of use per year.  With co-ownership you give up some of the flexibility and control enjoyed with 100% ownership, but you save thousands of dollars every year in doing so!

Here's the bottom-line: 

Is the guaranteed right to use the property on a specific holiday, 

or week, worth $192,689* more each year?  

*See the "Cost Per Year For Time Not Being Used By You" below. 

That amount is hard for anyone to justify. For $192,689 extra cost, you can rent virtually any comparable property, anywhere, for those few specific days/weeks of use.  If you are willing to be flexible on your use schedule, you can save a tremendous amount of money.  Better yet, invest that amount in another fractional ownership home, in another resort, or even an investment property, and enjoy more properties, with more leverage.

Ownership Comparison Fractional Villas Comparable Property
Ownership Type 1/8th Co-Ownership 100% Ownership
 
Use    
Minimum Annual Usage Right 45 Days 365 Days
Typical Annual Usage Time (For 2nd Home) 30 Days 30 Days
Right to Use Anytime  Subject to reservation   Yes 
Requires Flexibility In Scheduling  Yes   Yes, if being rented 
Potential Rental Income  No   Yes 
Positive Cashflow  No   Unlikely 
Potential Appreciation Yes Yes
  
Costs    
Purchase Price $379,000 $2,500,000
Down payment (25% LTV) $94,750 $625,000
Annual Mortgage (75% LTV @ 6.25%) $21,002 $138,536
Annual Expenses (1) $6,139 $50,000
Annual Property Taxes $4,737 $31,250
Total Annual Expenses & Mortgage $31,878 $219,786
Effective Cost Per Day @ 45 Days of Usage Per Year $708 $4,884
Comparable Nightly Rental Value $1,500 $1,500
Cost Per Day Not Being Used By You @ 320 Days Year=88% $0 $602
 
Cost Per Year For Time Not Being Used By You $0 $192,689

(1) Expense estimate including: utilities, insurance, maintenance, replacement reserve, property management.

 

Fractional co-ownership is the best solution to second home property ownership. 

When all factors and costs are considered, the answer to the question "Is co-ownership right for you?" will undoubtedly be, Yes!

The above referenced costs are considered estimates only.  Actual amounts of each cost, may vary with each Fractional Villa, or a comparable property.  These amounts should be considered for general evaluation purposes only, and not relied on as an absolute or actual cost.

 

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