Re-sale market for deeded fractionals?

[vivalour]

Has anyone had to sell a deeded fractional or have a handle on the history of re-sales? We are looking to possibly buy a 5-week deeded factional to supplement our HCC DC membership. The new development is tied into RCI as a Gold Crown property.

The pros: it's in a spectacular near-wilderness area a few hours' drive from our home; the developer is known for upscale, innovative building; we can get pre-construction pricing, and it's four season. Cons are the rotating intervals with weeks we probably won't use, and unknown re-sale market for deeded fractionals (in the northeast). Before taking the plunge we want to scope out the risks and re-sale market issues. Anyone have advice on these?

 

[Dave M]

Just like for timeshares, the resale market for fractionals is very weak. Thus, buy if you want to for long-term vacation use and expect to lose more than 50% of your original purchase price when you eventually sell.

Based on the research I have done on fractionals, I would buy only resale unless I was sure I would own long enough so that the average cost of my vacations, after considering the likely loss on sale, made sense to me.

 

[pwrshift]

My concern with fractionals is that most or many of them do not permit you to use your 'weeks' all in a row - such as a Canadian snowbird might want. Problem is that all other members want those weeks too, so it's got restrictions that may not be as convenient to you for actual use. In addition, most fractional 'families' are small which puts limits on exchanging.

While not a fractional, I came very close to buying a 1 bdrm condo-hotel suite at Red Leaves Muskoka as owners could use them up to 9 weeks a year but you'd give up shared revenues for those weeks. But Red Leaves forecast 56% occupancy rate over a year and I had trouble with that -- would anyone really go to Muskoka in February? Summer, after black fly season, might get close to 100% but I questioned an estimate of 56% overall.

I may have been right...they still haven't sold out after several years and open late summer this year, yet the Westin in Blue Mountaiin sold out in 8 hours. I'll be happy to use my Marriott Reward points to stay in Canada's first JW. www.redleavesmuskoka.com

A 5 week fractional would probably be split out over the whole year - prmie time and not so prime - and if you're OK with this because it's close by it could be a good deal for you.

Has anyone had to sell a deeded fractional or have a handle on the history of re-sales? We are looking to possibly buy a 5-week deeded factional to supplement our HCC DC membership. The new development is tied into RCI as a Gold Crown property.

The pros: it's in a spectacular near-wilderness area a few hours' drive from our home; the developer is known for upscale, innovative building; we can get pre-construction pricing, and it's four season. Cons are the rotating intervals with weeks we probably won't use, and unknown re-sale market for deeded fractionals (in the northeast). Before taking the plunge we want to scope out the risks and re-sale market issues. Anyone have advice on these?

 

[GregGH]

Has anyone had to sell a deeded fractional

I have been watching for re-sales and see few - if anyone else knows good web sites where they are listed -- care to share? Apart from Los Cabos or Ritz in Florida - there are few re-sales that pop up.

May we ask where you are looking? Are they offering a rolling series of weeks (eg if you get week 1 this year you get week 2 next year ?)

Greg

 

[Texan in NYC]

I would be curious where you are located and what fractional you are considering. We live in NYC, and have had a great experience so far with a 1/8th fractional we own, and I am confident that we would realize a profit after commissions and taxes, if we sold.

 

[Sherpa]

The best place to look is local brokers - it's deeded real estate so the brokers are often the ones who end up handling the resales.

As an example look at
http://www.okemorealestate.com/proddir/archive/217//-listprice/10/10?Search[location_type]='Jackson%20Gore%20Inn'&Search[sold]='false'&titleid=jacksongoreinn&IsActive='true'
(this is for the fractional shares in the Tugs post on Jackson Gore at Okemo)

or for instance if you search the real estate brokers in Aspen you'll find lots of fractionals offered.

 

[vivalour]

I would be curious where you are located and what fractional you are considering. We live in NYC, and have had a great experience so far with a 1/8th fractional we own, and I am confident that we would realize a profit after commissions and taxes, if we sold.

I would say NYC is an exceptional market--you can't lose there over time.
We live in eastern Ontario --about a two-hour drive from Montreal, and 4 1/2 hours from Toronto. We want to be within a short drive of anything we buy, and we'd like to think we could retain some investment value in a recreational property. But the market for fractionals is much less established in eastern Canada than in NYC, sunbelt & ski resorts and the west coast.

For recreational resorts, Mt. Tremblant, outside Montreal, probaby offers the most varied fractional properties with many re-sales. However, since Intrawest moved in as the lead developer, it has become grossly overpriced IMHO, and over built as well. Now the majority of buyers are from Europe and Asia.

A bit closer to our home, a new development about to launch is selling 5 weeks, 1/10 ownership at furnished 3-bedroom, lakefront "cottages" of impressive quality -- adjacent to 4,000 acres of conservation land --for $60-$85,000, plus $2400 annual mf. Buyers get a fixed summer week of their choosing, and 4 additional rolling weeks -- 3 per the other seasons, and another one (not clear on when). We are planning to check it out in person and get more details this weekend. So our two main questions right now are: does the fractional make sense for us; and after 8-10 years, could we re-sell for cost at least?

 

[vivalour]

My concern with fractionals is that most or many of them do not permit you to use your 'weeks' all in a row - such as a Canadian snowbird might want. Problem is that all other members want those weeks too, so it's got restrictions that may not be as convenient to you for actual use. In addition, most fractional 'families' are small which puts limits on exchanging.

A 5 week fractional would probably be split out over the whole year - prmie time and not so prime - and if you're OK with this because it's close by it could be a good deal for you.

Yes, the latter is exactly what we are looking at: five weeks split into four seasons with a fixed summer week of choice. Since we're at least 10 years away from being empty nesters and "snowbirds", it's hard to imagine how we could use all five weeks, though long weekends would be ok.

 

[caribbeansun]

This is a brokerage for quarter shares http://www.globalquarters.com although they don't have much inventory at this point.

Pwrshift - there are still units available at the Westin at Blue Mountain.

It's exactly these types of uncertainties that prompted me to form buying groups for individual properties with limited lives to the group - ie. sell out in 10 years time. This provides liquidity to the owners and full participation in the appreciation of the property. Granted if someone wants to sell out before the 10 years there could be potential liquidity issues if someone else in the group doesn't want to buy you out (or the group as a whole).

 

[x3 skier]

Bought a Quarter Share in Steamboat Springs at the Grand Summit a few years ago and it has appreciated nicely. One week a month plus another week every four years. Several shares are listed in the local MLS and the most popular are studio units the locals buy so they can use the facilities of the hotel. They seldom if ever show up in the MLS since there seems to be a waiting list with local brokers. Larger units are around much longer.

Cheers

 

[caribbeansun]

Based on the MLS listing prices or some other source?

Bought a Quarter Share in Steamboat Springs at the Grand Summit a few years ago and it has appreciated nicely.

 

[Twinkstarr]

When we did the fractional look a few years ago, we looked at the Homestead up in Northern MI. They have their own real estate sales, plus most of the local brokers listed properties their.

If you are interested the LeBear in Glen Arbor, MI is really really nice! They were going for $189000 for an 1/8.

Up at the Boyne devleopment it's the same, the have their branch but I have seen some of the fractionals/whole ownerships listed with the locals also.


Ebay just had a few weeks ago a fractional at Ocean Palms(HHI). Your weeks floated in 2 week sets. I'm kicking myself as it only went for 13,000. Free golf and tennis included, use and charging privleges over at the Westin.

As much as they say it's a four season resort, we couldn't pull the trigger on "up North". You end up with at least 2 mud weeks that I know you can't give away trying to rent. Ski season isn't as popular as summer. As much as we love it up there it just makes more sense to rent a week than buy.

 

[x3 skier]

Based on the MLS listing prices or some other source?

MLS and recorded sales from the county recorder.

Cheers

 

[jlee2070]

Just like for timeshares, the resale market for fractionals is very weak. Thus, buy if you want to for long-term vacation use and expect to lose more than 50% of your original purchase price when you eventually sell.

Based on the research I have done on fractionals, I would buy only resale unless I was sure I would own long enough so that the average cost of my vacations, after considering the likely loss on sale, made sense to me.

I thought HCC had a buy back program that limited your losses (of course with restrictions)... From their website "Membership fee is 100% refundable within the first year, 80% refundable thereafter, subject to the Club’s “two-in, one-out” policy.".

 

[GregGH]

I thought HCC had a buy back program that limited your losses (of course with restrictions)... From their website "Membership fee is 100% refundable within the first year, 80% refundable thereafter, subject to the Club’s “two-in, one-out” policy.".

HCC is not a fractional -- you do NOT hold a deed to the property. HCC like ALL DC's has a risk of 'early termination' ( 2 DC's have already done this )

With Fractionals on re-sale for the 'average' property you have to think the marketing costs will be a 'soft cost' that the original buyer will burn for. The problem is that there are not enough comparables to see what is really a trend - so far. I am curious to know how these will hold their value. Any maybe ready to snag a good value.

Greg

 

[vivalour]

We have come to the conclusion that fractionals have too many disadvantages for us to buy in. Probably the biggest two are having set weeks that have to be taken every year (most of which would be impractical vacation times for us), and upfront cost -- i.e. not good value for money, esp. since we'd have to buy from the developer.

On the other hand, even though we don't have deeded ownership, our HCC membership has turned out to be worthwhile so far, as we have had very comfortable and spacious accommodations in great locations, and we've been able to pick dates and places that fit in with our schedule & needs. Thanks to everyone here for your input!

 

[GregGH]

It is a shame there are NOT MORE fractionals that allow you a BLOCK of time. I have seen some in Hawaii that allow you two months. I can appreciate that many locations just don't have enough GOOD weeks and force you to swallow the many bad weeks ... :-(

We need more guys like Caribbeansun who put together groups of like minded people. ( disclaimer - I am part of one with him )

A good example might be Southern Calif --where us northern guys like the winter and the Texans like the summer period ...so fractions there should-could be a match made in heaven. Hawaii is another good opportunity since the travel costs and fatigue are so BIG - make monthly fractionals and their season is 'fairly' level in demand.

Florida or Northern Ontario - then it gets ugly ...and you need Perry to set the 'points' value ( so where is Perry these days - miss the posts as I always learn something )

Greg

 

[Steamboat Bill]

I have looked at many fractional properties such as the Ritz, and others in Colorado, Utah, Florida, Stowe, etc.

I like the concept of deeded real estate, but the LACK of tradeability was a deal breaker for me. Also, the rotating week system was the pits.

If fractionals ever copy the DC industry or timeshare industry, then I would buy in a second.

 

[Twinkstarr]

I have looked at many fractional properties such as the Ritz, and others in Colorado, Utah, Florida, Stowe, etc.

I like the concept of deeded real estate, but the LACK of tradeability was a deal breaker for me. Also, the rotating week system was the pits.

If fractionals ever copy the DC industry or timeshare industry, then I would buy in a second.

I think more people must think the same way. I was looking at Marriott's quarterly SEC filing(10Q) and their fractionals are really dead in the water in this economy.

Though was looking at the local paper in Glen Arbor MI and it seems LeBear(part of RCI's Registry collection) has transfered some of the units to a Lebear timeshare corporation?

 

[caribbeansun]

I found one fractional in Belize that sold their fractionals by the month block and the Royal Resorts newest Marina building at the Pelican in SXM is sold in 4 week blocks as well I believe (it's been over a year since I looked at that so I could be wrong). I was very close to pulling the trigger on the month of Feb on the Royal property.

 

[rayelias]

Just wanted to give this a little bump.

Future snowbird looking for a fractional "block of time" (2-4 months) in a specific location. The end result being that we'd own and live in 2-3 fractionals and only be "home" the remaining time.

Anyone using this approach (or planning similar)?

 

[caribbeansun]

I pretty much asked the same question here

 

[vivalour]

<<Please don't get me wrong - this is long-term stuff - as in 15 years out or more. Why I torture myself by even thinking about this stuff is beyond me but we have had casual conversations about setting some long-term goals and within that context we've talked about wanting to be warm during the winters, home in the spring, perhaps a couple weeks at the cottage in the summer and then a fall trip somewhere. It may well be that a DC will continue to be part of that mix but it doesn't seem as feasible for the extended winter period away from home.>>

We'll likely keep some kind of property in Canada and our DC if it still exists and makes sense for us. My DH thinks he will work-- in some form-- till his brains or body aren't up to it. I personally hate very long term planning (5 years or more into the future) because life takes too many twists and besides I like (good) surprises.

But --hoping when our parental responsibilities decrease in about 10-12 years that we can both do some meaningful (not-for-profit) work in a warm place --maybe a developing country in Central America and rent some comfy accommodations for 2-3 months. We will save our money for private health care....

 

[pwrshift]

<<
... My DH thinks he will work-- in some form-- till his brains or body aren't up to it. I personally hate very long term planning (5 years or more into the future) because life takes too many twists and besides I like (good) surprises.

... We will save our money for private health care....

It can sometimes take more than 'money' for private health care in other countries -- if your health isn't acceptable to the insurer they won't take you on. So save your health for private health care too.

Brian

 

[vivalour]

It can sometimes take more than 'money' for private health care in other countries -- if your health isn't acceptable to the insurer they won't take you on. So save your health for private health care too.

Brian

We work on it every day...dh & son are at the gym as I write. :zzz: