Relax in Paradise! Fractional Ownership for Vacation Homes - Abaco Rose, Casual Luxury Gulf-view Florida Vacation Home on Inlet Beach, Florida, on The Emerald Coast of NW FL.

Your Abaco Rose Beach Home Fractional Ownership Opportunity

Relax in Paradise! Fractional Ownership for Vacation Homes
by David Yarian, Ph.D.

Vacation homes are the most widespread use of the fractional ownership concept. After becoming popular in Europe, the practice first spread in the U. S. to ski resorts, then to the east and west coasts. Now fractional vacation homes are being developed throughout the country, particularly in Florida, in golf developments and in other resort areas.

Fractional ownership is also available at destination or residence clubs being built and operated by some major players -- Ritz Carlton, Starwood, Four Seasons, Hyatt and others. These companies manage large resorts in California, Florida, and the East Coast. Residence clubs also exist on a smaller scale, often as part of a hotel or residential development whose primary purpose is to house short-term guests or to sell homes to individual buyers.

Despite the variety of forms a fractional ownership vacation home may take –- from luxury single-family beach properties to what are essentially 5-star hotels and resorts; from beach condo developments to residence clubs that are part of a larger development –- they all share a number of common characteristics.

Most importantly, fractional ownership is not a timeshare. The difference is that a fractional share owner owns a deeded share for a fraction of the property. A timeshare "owner" is entitled to access to his property for specified periods of time; he has no ownership interest in the property.

An alternate structure that is occasionally used for single-family vacation homes is the Fractional Property LLC, essentially a holding company in which all share owners have an equal interest.

Whether the fractional share owner owns a deeded percentage of the property or a share in an LLC, there are a number of benefits. If the property appreciates, owners' shares also appreciate in value. Share owners can buy, sell, trade or otherwise convey their fractional share of the property. Share owners, as members of the Property Owners' Association, have input into decisions affecting their property. There may be tax benefits to the share owner from deducting mortgage interest or the fractional share of the depreciation on the property.

Some fractional vacation companies manage properties in different parts of the world. Owners can buy a fractional share in one of these properties, but are allowed to trade access to their vacation home for use of a home in another location.

Fractional ownership vacation homes are managed by a property manager who handles all business matters, arranges scheduling of owners' visits and may take care of many things to make the owner's arrival easy and effortless. Owners' personal items may be removed from their private storage area and placed in the home, ready for their arrival. The refrigerator and liquor cabinet may be stocked with specified items; tee times, tennis lessons, child care, spa appointments and charter fishing can be arranged.

A fractional share of a vacation property entitles the owner to a specified amount of use of the property. A 1/13 share means the owner enjoys four weeks in the property every year; a 1/6 share allows for eight weeks per year. Some fractional properties have a set calendar, with owners' weeks rotating through the year so there is fair distribution of favorite holiday times. Some developments allow owners to trade time among themselves; others have complex bidding procedures where an owner may have several fixed weeks per year and several floating weeks, to be determined year by year.

All the details of the legal and financial structure of the fractional vacation home are clearly set forth in the deed, LLC Operating Agreement, and other management documents. Most fractional properties have a monthly or quarterly fee assessment that covers operating expenses, management, taxes, insurance, maintenance, landscaping, and a fund for furnishings replacement. Annual accounting of all expenses and budget projections for the forthcoming year are made available to share owners for approval and input.

The growing popularity of fractional ownership vacation homes is explained by the significant benefits they provide –- particularly, that of having access to a luxury vacation home without the expense, liability or headaches of owning it outright. No repairs, no shopping (unless you want to), no worries. All the owner has to do is show up, unpack the suitcases and – enjoy.

Financing options for fractional vacation homes will be covered in a separate article.

David Yarian, Ph.D. is a practicing Psychologist, and a real estate investor specializing in fractional ownership of luxury vacation homes. He writes the blog Florida Fractional Ownership http://www.FLfractionalOwnership.com which covers the fractional vacation home market in Florida and around the world. His latest project, Abaco Rose, may be seen at http://www.AbacoRose.com. As a committed environmentalist he supports green building practices and sustainable development. His environmental resources website and blog are at http://www.SavingtheEarth.net.

© 2008 Permission is granted to reprint this article in print or on your website as long as the paragraph above is included.

These materials are furnished to provide general information. The presentation is for discussion purposes only, and does not constitute an offer to sell. An offer to sell a fractional interest will only be made with documentation specifically indicating that it is an offer to sell.

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