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Deep Cove home owners wanting to get away from it all?

Blog by Patricia Houlihan - Personal Real Estate Corporation | July 3rd, 2008

Deep Cove home owners wanting to get away from it all?

When you live in paradise (aka Deep Cove) it is hard to find a need to "get away from it all".  Having sat on my own Deep Cove deck this past weekend, looking out at the ocean and occasionally jumping into it, I can't see myself making it to my Okanagan or Nicaraguan properties as often this year.  Having said that, it is nice for a change to get away.  However, since everyone only has so much time, it is sometimes hard to justify owning vacation property that doesn't get used enough.  The popularity of fractional ownership seems to be increasing as people want to be able to enjoy vacation properties which they can only use occasionally and which may be out of their budget. Some are preferring to buy part of a higher end vacation home rather than all of a lower end one.  This is when fractional ownership can make great sense.  It is a bit more complicated legally but only slightly. There are some great projects on the market now which offer fractional ownership opportunities.  In addition, some sellers are setting up their own fractional ownership options.  For example, we just listed a property on Shuswap lake-it is a lovely home and while the sellers really enjoy it, they are not able to spend enough time there so they have decided to sell half of it. As I was working on the marketing of this home, I came across an article on the issue of fractional ownership-it is directed at realtors but has some good points:


Selling: Carving Out a Share of the Good Life


Fractional ownership of second and vacation homes brings new opportuntities to practitioners.

By Wendy Cole | July 2008

You have clients who'd love to buy a luxury vacation home on a stunning mountain range or a sparkling lakefront. But the asking prices of $1 million or more are simply out of range. Before you decide there's no way you can help them reach their dream, consider what fractional ownership might do for prospective buyers on a budget.

The seven-year-old American Fork, Utah-based GrandShare specializes in fractional ownership, putting cabins, condos, and other amenity-filled dwellings for sale to multiple buyers. Unlike a time-share where access, rather than actual property, is being sold, fractional investing as devised by GrandShare is a one-stop shopping process with the backing of lenders and other real estate support specialists.

In a fractional transaction, buyers typically buy a one-fourth portion of a property. (They don't have to know the other owners.) A $1 million second home costs each buyer just $250,000. For that price, owners can use the home for three months a year and rent out any weeks they don't use. The buyers receive deeds for their shares and build equity. If one owner defaults, the shares owned by others are untouched by the foreclosure process.

GrandShare uses MLS data to find and purchase properties being offered as fractional sales and homes it can convert into fractionals. The process offers opportunities for involvement by real estate professionals.

"We understand the value that real estate professionals bring to transactions," says Mark Chesney, GrandShare founder and chairman. Real estate practitioners can serve as a listing agent for property GrandShare initially buys outright or as GrandShare's representative when the property is resold fractionally to a group of buyers. GrandShare also pays referral fees to salespeople who bring the company clients.

"These days, a million-dollar house can sell faster as $200,000 shares than at a full million," Chesney says. "Our process offers a great hedge in this unpredictable market. Buyers are not fully exposed to risk as they would be with full ownership, yet the investment offers significant upside potential."

He expects that second-home owners may be enticed to put a property up for sale fractionally if the carrying costs have become a financial burden or if they use it infrequently but still want to keep a stake.

Fractionals create more complicated transactions than other sales because of the co-ownership arrangement. "That's what we're here for. We help real estate professionals write the contracts along with many other details," says Chesney. 

For more information, visit www.grandshare.com.