Chicago Real Estate
things to consider before buying or selling
Chicago readers won’t be surprised to learn that anyone able to afford a multimillion-dollar vacation property is likely to be fairly adept at math. It turns out that an emerging trend in the highest end of the vacation home market also calls for some familiarity with fractions.
Closing out the year in style, the Wall Street Journal’s real estate section editors provided an interesting spread delving into the palazzos, castles, villas, and vineyards that make up the second homes of international luxury buyers. This would not ordinarily be especially newsworthy for WSJ readers since their Mansion section regularly offers similar photo spreads.
What made this December entry worthy of crossing over into the news area was what is becoming a growing trend for “some well-heeled nomads” investing in second and third luxury homes: fractional ownership.
The idea is that rather than investing millions in centuries-old luxury villas (there was an example in Tuscany) or , some wealthy vacationers are opting to “hop among bite-sized” private residences in which they have only partial ownership. Since they might visit these real estate acquisitions only a couple of times a year, they are opting to split ownership with similar-minded folks. This is known as fractional ownership strategy. A similar but slightly different incarnation is found in the private residence clubs. Both are gaining traction.
Since there is a myriad of ways the details can be handled, the article was scant on details. It pointed out that a residence club usually costs more than does a typical fractional property—but that higher price tag confers nicer amenities and fewer owners. Both typically have the advantage of dispensing with the tedious side of luxury vacation home ownership: opening up the house, power-washing the patio, etc.
But “there are downsides” which sound similar to complaints heard by some timeshare buyers. Partial owners can find that scheduling the weeks they will be allowed to visit their luxury home is determined by rotational systems that vary from year to year. More significantly for those with an eye to the investment value of their luxury getaways, the Journal quotes one observer regarding the difficulties of trying to sell a fraction of a ski area property. “Listing 1/10 of a ski condo can be as tough as trying to sell one-half of a pair of skis.”
I am a Chicago Real Estate Broker that loves to show people around the Chicago neighborhoods.