CASE STUDY

GrandShare Makes Luxury Vacation Homes Affordable with Fractional Ownership

Regina Bowen owns a commercial construction and landscape company in Richmond, VA. She and her athletic family have a passion for travel and activities such as hiking and skiing. The problem is many times, the local ski resorts leave much to be desired in terms of snow pack; as a result, the winter months often find them in enjoying exclusive ski areas throughout the Rocky Mountains.

Bowen fell in love with a particular area of Colorado called Keystone, which is home to some world-class skiing. She wanted to be able to go there often so she looked into purchasing a vacation home.

“We saw several beautiful properties, but many came with a price tag of more than $1 million,” Bowen said.

She needed another option and a conversation with a friend opened her eyes to a whole new world in terms of owning a second home. Her friend turned her on to the concept of fractional ownership, which is where a few different people own portions of a deed to a single property.

“We found several reasons why fractional ownership made sense,” she said. “We didn’t have to come up with the full price of the property owning it fractionally made it possible to afford. Also, we didn’t want to own the property outright because obviously we could not be there the entire year. But, our situation would allow us to use the place once a month or so.”

GrandShare Made it Easy

The Bowen family was introduced to a company called GrandShare, which is a pioneer in bringing buyers, sellers, real estate professionals and investors together to make the process of buying or selling a fractional property a snap.

GrandShare helped put Bowen and her family in a beautiful exclusive ski in/ski out condominium worth more than $1.3 million in one of the top rated ski resorts in the nation at a fraction of the cost.

“Working with GrandShare in purchasing our vacation home was one of the easiest processes I have ever been through,” Bowen said. “The peace of mind that comes with GrandShare managing the process and the property is wonderful. We don’t have to worry about the bills, we don’t have to worry about the taxes, and we don’t have to worry about the maintenance. It’s all taken care of in one monthly invoice, it’s very nice. We get to enjoy a luxury second home without the hassles.”

Bowen owns the property with three other people. GrandShare takes care of the scheduling and coordination between all the owners. “If there is something we all need to be in on, they coordinate the conference call and work it through,” she said. “Knowing the home owner’s association fees and everything else is taken care of by extremely competent people, is very valuable.”

Fractional Ownership is Not Time Share

Bowen said she considered a time share to find a ski vacation spot, a natural thought, since she owned six time shares already. They wanted something that offered more than time share. Availability was a key deciding factor. Even though she owned six timeshares, sometimes she wasn’t able to obtain the weeks or the locations she wanted, it was out of her hands whether or not she got what she was looking for.

“Every time we go to a new place, there is always a question as to what to expect. With fractional ownership, it’s ours--we own it,” Bowen said. “We know exactly where we are staying, what we are sleeping on, what to expect and we don’t have to worry about alternative accommodations.”

Ownership is Ownership

With fractional ownership one owns the property and all the benefits that go along with it.

“Equity was another positive reason we went this direction. Within the first three months of ownership, the value has gone up more than $100,000! I’d say we did pretty well.”

Additionally, when Bowen can’t use the property, there are opportunities to recoup much of the cost of ownership by renting the property to others. “The property manager called and asked if we would be willing to rent it out to a high-dollar client for the month of February for a company retreat. We gladly agreed and ended up bringing in $6,000 for one week!”

Fractional ownership has made it possible for Regina Bowen to know that even when it is raining in Richmond, she has a home away from home nestled in the snow-covered Rocky Mountains.

CASE STUDY

Fractional Ownership as a Real Estate Investment Makes Sense

Barbara Rankin is a Realtor® in Colorado. In her profession, she comes across all kinds of new and exciting opportunities. She recently worked with GrandShare to invest in a relatively new prospect called fractional real estate.

With fractional real estate, several people purchase a portion of a second home or vacation home. GrandShare provides both a legal and usage structure that makes sharing a property easy.

Usually, people would participate in fractional real estate with the intent of using the property as a vacation home; however, there are a growing number of people who are looking at this option as an investment with growth potential.

Fractional real estate as an investment

The idea of fractional ownership for luxury items like jewelry and jets has been around for years, but it is just now that real estate investors have the chance to make money and profit from fractional ownerships. This is due to the creation of the solid operating agreements GrandShare provides that mitigates hassles and streamlines the processes of getting in to a fractional deal.

“I bought a fractional property as an investor, I don’t actually use the property as a vacation home,” Barbara said. “The market can be somewhat volatile, but in the Colorado market, the prices are going up. I have found that for my situation, investing in a fractional property made a lot of sense.”

She is in this particular property at a ski-in/ski-out resort with three other owners—why?

“It is not a timeshare; its value can appreciate, just like a normal property investment opportunity. That was a very attractive prospect for me, and it gone very well.” she said.

Purchasing a quarter of a property is a popular option. In a situation with four owners, each owner would get his or her own title just for his or her legal quarter interest. They can mortgage it, pay their mortgage off, or sell it just as they would another property.

At this time, Barbara only has one fractional property under her belt, but an option others have considered is “diversified real estate investments” with fractional ownership.

The idea here is that one could use a certain amount of money and invest it in one single property (all your eggs in one basket scenario). The problem is that the value of that property is beholden to the market in that one area. By diversifying real estate investments with fractional ownership, one could own portions of deeds to several properties for the same amount of money.

Benefits of fractionals

With fractional ownership, Barbara was able to afford a nicer, bigger property and at the same timeshare all the expenses and maintenance costs with the other owners. Also, GrandShare manages the bills so all the expenses are combined into one monthly fee.

“I decided to buy fractionally because those looking to go this way can spend much less for the same property you had in mind if you were not planning on using it year-round, or you could get a much bigger property for the same price,” Barbara said.

For instance, if you have $200K to spend on a vacation property in a hot vacation spot, you might be able to get a studio if you bought it all on your own. If you went fractional, you could get two-to-three bedroom property you would share.

A young family with a couple of kids can afford to be in a really nice property with plenty of room, where they wouldn’t be able to do that for the same amount of money otherwise. Also, all they have to do is show up; they don’t even have to worry about paying different bills such as property taxes, Home Owners Association dues or utility bills. They just send in one monthly payment to GrandShare

“It’s a really easy to own and use the property—and I still get all the tax and ownership benefits,” she said.

Barbara has access to the property 12 weeks out of the year. When it is her turn, she has the option to put it into a rental pool, so she can earn the income from those days that are allocated to her.

The use of the property can be flexible as well; she can trade weeks with the other owners if they want. With this, the users don’t own the time, like a time share, they own the property and the time is scheduled out on a calendar.

Reducing complexity with GrandShare

“At one time, the process of getting into a fractional property was very complex, but GrandShare made it easy,” Barbara said. “It’s just like any other property for people to purchase.”

As a realtor, Barbara appreciates having the option of fractional real estate. “I work to find out what is best for my client. Sometimes they come looking for full ownership sometimes specifically for fractionals. As a realtor, I can help them find either,” she said. “If they want a fractional property the process is similar, they still go through the contract, inspection, title work and so on. The biggest difference comes to financing, a lender would need to do a slightly different type of loan, which is slightly different, but today it is very doable.”

Working with GrandShare

“My experience with GrandShare has been great—they pretty much take care of everything!” Barbara said. “They have the experience in setting up the legal ownership agreement, which is the key piece in setting up a fractional ownership deal. They facilitate the ownership agreement which governs the working relationship among the owners. They facilitate the communication among the owners and if there are any issues that need to be addressed on the property, they take care of it. As owners, we don’t even need to think about it. If there is anything that needs to be taken care of with the property management company, we don’t have to worry about it. GrandShare takes care of it all.”

With anything new, there sometimes can be a learning curve. GrandShare can help overcome that challenge and show how it can work to the benefit of all.

“Sometimes people are afraid they would get stuck with other owners who are problems,” Barbara said. “My experiences and that of my clients have shown that everyone is in this for the same reasons, and they do what is necessary to protect the investment and do what is best for the group as a whole. People shouldn’t be nervous about the prospect of fractional ownership, especially when GrandShare is in the picture.”

“My intention was to strictly rent it out, which I have done successfully, but I have ended up using it a few times on my own and since it is such a nice property, I think I might do that again. I have actually found myself using it with my family to ‘go away’ for a weekend mini-vacation,” she said.