For the discerning client that looks to invest in Specialty Real Estate.
Options for Second Home Ownership   by Jamie Klein
As you may or may not know there are many options when selecting a second home for your family. The right selection all depends on your utilization and location preferences. An investment to utilization model should should be used determine how much you are willing to spend based on how much time you are going to spend at your new second home. Now determine how much time you are willing to invest to maintain that new property? And finally, how much flexibility does your family want or need? We will start to address these questions and the benefits that each of these second home options has for you and your family. Most companies only sell one of these options and act like the others do not exist. However, as a Specialty Real Estate company with over 30 years’ experience, we can give advice and help you select the option that fits best with your desires and family needs. Here are the different second home options we will review:
  • Second home Whole Ownership
  • Fractional Ownership
  • Vacation Deeded Ownership
  • Vacation Right to use Ownership
  • Point Vacation Clubs
Second Home Whole Ownership
This type of ownership has the advantage of availability all the times. If you purchase at the right price, in the right area, you will also have the greatest opportunity for asset appreciation, assuming the market allows for this. The clear disadvantage is that you are responsible for all the costs which include upkeep and maintenance. This is the number one complaint of whole second home owners. Also, answering the question of how much am I truly going to utilize this second home and is it worth it to me, based on the utilization/ investment ratio. If you are ok with this, then maybe owning 100% of your second home is the best value for you and your family.
Fractional Ownership
In this ownership option, you are purchasing a fraction of the residence. For example, a 1/12th ownership of a residence is exactly that, 1/12th of a deed. This is different than timeshare as timeshare is about a vacation product that replaces a hotel room for vacations. Where as a fractional ownership is a second home product that is an option to purchasing a whole ownership second home. Fractional ownership is marketed and sold more like general real estate and less like a timeshare. Fractional ownership works best in areas where second homes are popular, but expensive. Locations like Aspen and New York are great examples of where we have offered fractional products with great success. The many benefits of fractional ownership are, the sharing of expenses, a lower price of entry into the market, not having to worry about maintenance issues, and sometimes exchange flexibility. The number one reason we find second home buyers purchasing fractional ownership is the price paid verse itilization. For this consumer fractional ownership is a great benefit. The only drawback is availability of your residence purchased, based on your used plan and percent of ownership. If you truly like an area and want to return many times during the year this is a very powerful second home ownership option.
Deeded Vacation Ownership
This type of ownership you are purchasing one week a year and getting a deed to that one week. Deeded vacation ownership is becoming obsolete due to the emerging of the point vacation club products which dominate the market. The consumer, especially with families that vacations in hotels, can really benefit from this kind of second home ownership. This is really more about vacationing than second home ownership. When you look at three important factors of choosing this ownership consider; 1) the size of the residence to accommodate your entire family, 2) the fact that you can buy groceries and have a full kitchen to save money, and 3) vacationing flexibility. Also, the number one reason that people are enjoying this type of second home is the exchange benefits that comes with it. With literally thousands of resort destinations available you can move this second home experience to the location of your choice. You need to fully understand how to exchange successfully and have correct expectations of your exchange before purchasing, a very, very important factor. The drawback is clearly availability, as you only own one week.
Right to use Vacation Ownership
This type of ownership is the same as the above, except there is no real estate ownership. You just have the right to use the residence for a specific time period.
Point Vacation Clubs
This type of second home ownership was brought about when the hotel industry really reviewed the way timeshare resorts 'use plans' were set up. What has been created is probably one of the best vacation products, depending on your family’s lifestyle, you can purchase. These Point Vacation Club purchases are not tied to real estate like Whole Ownership, Fractional Ownership, and Deeded Vacation Ownership. Instead of purchasing time, which is what you purchase with a deeded ownership, you are purchasing points redeemable for time. Developers do not have to comply with the expensive real estate ownership legal work, as they can sell as many points or as few points as they desire giving them great flexibility in pricing. The points you purchase are monetized just like cash for accommodations through whichever resort and point system you purchased into. The good news is that many of these resorts can only be accessed by points. So, if you have points you are welcome and if you don't you cannot get access. For the consumer that purchases these point programs their benefits far exceed the traditional timeshare sold a week at a time. Here are some of the benefits; 1) you can stay as little as two nights or as many nights as you have points for, and 2) the resort has availability, 3) you have access to all external exchange options, 4) you can take many small vacations with ease, 5) you can borrow points from next year, 6) store points not used from last year, and 7) take really long extended vacations. Points give you extremely flexibile options. After getting points the only variable is availability of the resorts that you want to access. The drawback to point programs is understanding how your point’s work as it relates to availability of vacation time and resorts you want to vacation at. So make sure you understand the availability of the resorts you want to stay at, the amount of points you need, and how the availability systems work. This is very important in managing your expectations. The Lore Institute's Owner Care programs are currently showing clients how to upgrade their timeshares weeks into points. There are some very good programs out there that will give people, that purchased time by the week, the option to convert these weeks into points or continue to use the week at the time they purchased. Feel free to contact us if you need help with these upgrades.
I trust these short explanations of second home options were helpful. Understanding what your vacation preferences are, where you like to go, how often you like to go, when you like to go, size of accommodations, tolerance to investment verses use, and the flexibility of locations your family needs, are the keys. In many cases it makes sense to review all options with the Specialty Real Estate expert, which can offer all of these second home options to you. This way you will find the perfect fit for your family.
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  Company Address:
Jamie Klein, 3824 Vista Blanca, San Clemente, CA, 92672,
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