Fractional Ownership is not Timeshare

Timeshare has been around for a long time as a form of vacation ownership. Although fractional ownership has also been around for a long time as a means of owning large luxury items such as yachts and jets, its popularity as it applies to vacation ownership properties is more recent. Millions own and enjoy the benefits of timeshare. Even more millions have been turned off by the high pressure tactics often employed in the timeshare industry during their presentations. Fractional ownership is an alternative to timeshare that offers many advantages. It is actually a smart alternative to whole ownership.

Timeshare is typically defined as the division of property rights into fractional interests based on time. In timeshare, the owner has rights over units of “time” rather than the underlying assets. Fractional ownership on the other hand, is co-ownership. The underlying assets which include the real estate, chattels and amenities are owned by a corporation whose members are the owners of fractional intervals. Each interval owner owns a share in this corporation. This difference offers the fractional owner some significant benefits.

Timeshare is sold at a huge premium to the underlying property value. The price of many fractional ownership developments bears a reasonable relationship with its underlying property value. This is partly because fractional ownerships are sold as fractions such as 1/12, 1/10, ¼ shares versus a week of timeshare.

The value of fractional intervals can appreciate over time, particularly as the value of the underlying real estate appreciates. Timeshares depreciate over time and often quite significantly. This is particularly true in those cases where the timeshare rights are for a specified number of years after which they revert back to the developer. The marketing and sales costs associated with timeshare are very high and can represent as much as 50% of the purchase price. These costs are generally much lower in the case of fractional ownership developments.

Fractional owners generally have control over matters such as rules and regulations, maintenance fees, etc. A Board of Directors made up of fractional owners is voted into office at Annual General meetings. The directors are bound by the bylaws and the owners’ agreement. These can only be changed by the membership as a whole based on ruled in the bylaws in effect. The Board of Directors must approve operations budgets and management fees. In most timeshare projects the fees can be arbitrarily set by a management company or developer. Management fees are more likely to be fair and reasonable if set by the interval owners themselves.

It should be noted that the information provided above are generalizations and that timeshare and fractional ownership structures may vary. As with the purchase of any product, potential buyers are advised to ensure that they deal with reputable and ethical developers. Compare values. Talk to owners who have already bought at the project.

Fractional Ownership at Blue Water Acres offers some of the following benefits:

• Real detached lakeside cottages. Muskoka is affectionately known as “cottage country”. Blue Water Acres is cottage country.
• Prime location on one of Muskoka’s most sought after lakes. Close to Huntsville and Algonquin Park.
• Best fractional ownership value in Muskoka.
• Lots of recreation amenities including indoor pool, tennis courts, beach and much more.
• Carefree – no maintenance workExchange privileges.
• Over 2500 resorts to choose from in more than 75 countries.
• Ownership is in perpetuity. You can enjoy it for a lifetime. You can leave it to your heirs or sell it.

Established in 2008, the project is well on its way to completion. Twenty two new cottages have been built and more than 150 fractional intervals have been sold. It is no longer just a concept. It is a reality.

For more information, visit our website: http://bluewateracres.ca

Stay at the Best Resorts for $500 per week

I personally own 2 intervals at Blue Water Acres in Muskoka which gives me 10 weeks ownership. Blue Water Acres offers fractional ownership of detached 2 and 3 bedroom lakeside cottages on beautiful Lake of Bays at extremely competitive prices. I use most of these weeks to travel to resort destinations around the world. My maintenance fees for the 10 weeks adds up to about $5000 per year or $500 per week.

Fractional ownership at the resort comes with a gold membership to Interval International which is one of the world's largest and most successful exchange companies. I am able to deposit any of my weeks (one or all if I want) and exchange them for weeks at other member resorts. There are over 1200 resorts in over 75 countries to choose from. Many are brand name resorts such as the Marriott's. Many of these resorts can cost as much as $400 per night or more. My exchanges have included destinations such as Florida, Aruba, Mexico, Vail Colorado, Radium Hot Springs in BC, Scotland, Malta, California, Arizona, and more. Most resorts where we've stayed are 5 star. Almost all of our accommodations are in 2 or 3 bedroom units with two full baths, and full kitchen.

I concede that I must own a fractional cottage before I can take advantage of this great arrangement. However, I do not include the capital cost of my purchase into this equation. I am making the assumption that the value of my interval which is real estate based, will increase in value. As such I tend to treat it as an alternate form of investing my money to that of putting into bonds or stocks. All resales at Blue Water Acres to date have appreciated over the original purchase price. Besides, even if I only break even, it is at least an investment I can use and enjoy and that has to count for a lot.

To be honest, I should have added the administrative fee paid to Interval International to make the exchanges. The cost of this is about $139 US per week. Even considering this, it's an absolutely fabulous deal. Here are several examples of resorts we've traded into.

Most owners of course, prefer to stay at Blue Water Acres for most of their weeks, but it nice to have the option of trading one or more weeks and going elsewhere.

Marriott Ocean Pointe, Palm Beach Shores, Florida
Marriott Grande Vista, Orlando, Florida
Raddison Golden Sands, Malta