State of fractionals

Why buy a whole pie if you only want a pie? If fractional jet ownership makes sense to you, fractional vacation home ownership will too.

As the second home market is experiencing a boom time, 1/3 of all homes sold last year were for second homes. Many will be used as retirement residences in the future, but who wants a single retirement home when you can buy several in different locations for the same expense?

The 76 million baby boomers who will retire in the next 15 years are studying their options and one hot option is fractional real estate ownership. The biggest number of boomers turned 50 this year and last, and at 50 years old, statistically people begin to shop for a retirement residence. At the same time, the fractional real estate business is red hot.

Where do boomers want to be in retirement? On a golf course? Although many do, most want to be in walkable communities, with shopping and dining options. Many want to return to school, and pursue educational interests they never had time for before. What if you can own 4 homes, for 3 mos a year each, and enjoy all the best places.

Quarter-share fractional ownership allows this dream to be an affordable reality.

In a fractional ownership share you are guaranteed a set period of time in your residence. You know years in advance when you will be enjoying your vacation spot. Many fractionals also allow exchange so that if you ever bore of the 'same old great place' you may be able to trade it for another destination residence.

How is fractional different from timeshare you may ask? Timeshare is typically sold in 1/52, or one-week, shares. This greatly increases the marketing expense and dilutes the real estate value or your deeded purchase. With fractional, 1/12 or a full month of use, is typically the minimum share, and the real estate value you are purchasing is closer to that of whole ownership.

Mortgages for timeshare are readily available, but again at a much higher rate and cost - typically 10% or higher rates. Financing for a fractional is again much closer to that of a typical second home with many of the same 30 year type mortgage options. Few lenders understand fractional financing.

Buyers of fractional also benefit by sharing the cost of these facilities, boomers will be able to afford the lifestyle for which they desire and have become accustomed to while affording multiple homes in retirement.

Bob Waun , Founder & CEO
Vacation Finance
bwaun@vacation-finance.com

Bob is CEO and Founder of Vacation Finance, America's First Second-Home Lender, which is a leader in the fractional ownership, condo hotel, cottage and timeshare financing business. Vacation Finance offers a full range of mortgage options for second home buyers and offers fractional financing from 1/4 share to 1/12 share.

Originally posted here

05/01/09