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FAQ’s About Fractional Ownership

FAQ’s About Fractional Ownership

If you’ve ever considered buying a mountain home in Colorado, you’ve probably come across Fractional Ownership listings. This is where you literally own a fraction of the condo and share it with several or dozens of other individuals. Matt Wilson with Usaj Realty and a Vail, Colorado resident explains some of the nuances of these transactions and what they can mean for you as a buyer.

Q: What does it mean when you own a fraction of a property?

A: Every property can be a little different. In most cases, ownership is divided among multiple individuals, and how large of a fraction is predetermined. There are a few different ways the time you get in the property are set up:

  • In some cases, the weeks you purchase are set.
  • Some properties allow you to trade weeks within the same property for other weeks and others allow you to trade time at your primary property for other destinations.
  • Some properties allow you to rent your time to another party, while some do not.

Honestly, I don’t think there are two properties that have the same benefits to ownership set up in the same way. It’s certainly in your best interest to have your Real Estate Agent research everything that comes with your vacation homeownership.

Generally, all fractional properties have an HOA where you don’t have to do anything except show up and yes, there is usually an annual or monthly fee for this hands-off approach to ownership.

It’s certainly in your best interest to have your Real Estate Agent research everything that comes with your vacation homeownership prior to purchase. It’s likley that no two properties are identical in how they run fractional ownership.

Q: What is a common type of fractional ownership that you see in Vail?

A: A common type is a 1/12 ownership, where you have 2 weeks in peak season to access the property and 2 weeks in the off-peak — that’s 1/12th of the year.

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Q: Who is the ideal buyer of a fractional home in Vail?

A: A frequent visitor or someone who enjoys coming here and not worrying about any of the responsibilities that come with vacation homeownership.

Q: Where are some common fractional ownership properties available?

A: Austria Haus, Ritz Carlton, both Vail and Bachelors Gulch, Four Seasons, Marriott, Park Hyatt, Timbers, among many others in the Vail and Beaver Creek area. Contact me at Matt@usajrealty.com and I can find one that fits your criteria.

Q: From an investment perspective, what challenges do they present? Are they challenging to sell?

A: Many times they are tailored to a specific vacationer. Certain weeks work better for some than others. Some are like a vacation club. Sometimes your ownership only gets you 1 week a year, so you’d need to weigh the pros and cons on if that expense is worth it for you and your family.

Q: If I decide to buy an investment property instead, can you help me with that?

A: Yes. If you are considering full ownership, which increases flexibility and options, I can recommend a vacation property management company that can give you a hands-free approach, with income, and they take care of everything! Reservations, cleaning, maintenance, concierge services, and etc. all for about 40%. I can also help with pointers, professional photographs, and other amenities for short term rentals. Still, some other properties can do everything for you via their property management and are many times located within the front desk.

Q: What is a short-term rental in Eagle County?

A: A short-term rental is anything less than 30 days in Eagle County.

Q: What is a condotel?

A condotel is a condominium that operates as a hotel, where you will find a front desk, cleaning staff, and many of the other amenities found in a typical hotel. The difference is that all of its units are individually owned as condominiums. Reservations are typically handled by the front desk and depending on the owner, can be included within the rental program to paying guests. Rooms are seldomly occupied as primary residences and this type of property is typically found in a resort destination. This classification of the property saw higher levels of default during the pandemic and can see different loan limitations.

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