A Slice of Paradise
Not all fractions are created equal. For many second-home buyers looking for a slice of mountain-town life, fractional ownership has traditionally meant buying into a luxurious private club or hotel. At places like Vail’s new Four Seasons Residence Club and Steamboat’s One Steamboat Place, a fractional share in a residence comes with a hefty side of elite amenities, such as ski valet service in winter and access to exclusive golf courses in summer. But another approach to fractional ownership is quietly gaining steam in Colorado’s ski meccas. Buyers looking for a bit more solitude can purchase shares of individual houses and town homes, giving them access to upscale single-family living at, well, a fraction of the hassle of owning a second home.
“It’s a market that’s set to take off,” says Todd Houghton, an agent with Your Castle Real Estate in Summit County, who recently sold a quarter-share of a four-bedroom, ski-in, ski-out vacation home in Breckenridge for $275,000. Though no hard data on sales of this type exist, brokers report that there are an increasing number of buyers interested in partial ownership of family homes over membership in deluxe resort communities. Like their counterparts at resorts, these stand-alone properties often come tricked out with granite countertops, stainless steel appliances, designer décor and high-end electronics. Alpine Quarters, Inc., a brokerage that specializes in fractional mountain homes, stocks its properties with board games and mountain bikes, says president Doug Freyschlag.
Besides the general benefits of fractional ownership—an upscale mountain getaway at a much lower cost than it would take to own an entire second home, plus shared maintenance expenses—buyers love the privacy and homey feel of owning a share in a stand-alone. “It’s like a second home—we can personalize it,” says Jim Lee, a Castle Pines financial planning consultant who recently sold a half-share of his three-bedroom Keystone condo for $700,000.
Realtor Todd Houghton says that his clients like to be able to bring guests along for a family-style escape in a bigger home: “We can have three or four families in there at the same time,” says Houghton, and children get their own bedrooms, while adults enjoy a top-of-the-line kitchen. These are buyers who “want to cook a turkey for Christmas dinner.” (Try that in a hotel room.)
Experts point to yet another reason for this ownership model’s burgeoning popularity: a growing sense of environmental sensitivity among vacation homebuyers in the past few years. “More people who could afford the whole thing are choosing to buy a fraction instead,” notes Andy Sirkin, a lawyer who specializes in fractional ownership—in part because of the waste associated with building, heating and maintaining a home that’s only used for a few weeks a year. “These models are great for preserving natural resources,” agrees Freyschlag.
Despite their appeal, stand-alone fractional homes remain under the radar in many mountain towns. “Many brokers and buyers don’t know about this,” says Kim Hebron, an agent with RE/MAX Properties/66 in Frisco. When prospective buyers do locate an opportunity, it can be difficult to obtain financing for the share. And some worry about clashing with co-owners over schedules or maintenance issues. But as most buyers report, legally binding use agreements and third-party property management ensure that shared ownership goes smoothly.
Some luxury buyers are bound to prefer the all-inclusive approach of a private residence club or the autonomy of solo second-home ownership. But for Nebraska anesthesiologist Myron Munn, the appeal of his $425,000 quarter-share in a Breckenridge vacation home is obvious whenever he visits the four-bedroom, four-and-a-half bath property with its sweeping mountain view. He says, “It’s very pleasurable to walk in the front door of a fabulous house and know that you own part of it.”
WORDS OF WISDOM
Thinking of buying into a stand-alone fractional home in the mountains? Arranging the perfect situation will likely take a little legwork.
A simple search of real estate listings won’t always unearth this type of ownership opportunity. To find one, advises attorney Andy Sirkin, call local brokers who know the market and ask where to find stand-alone shares. Also try Googling “single-family fractional home” or “stand-alone fractional home” along with your desired location—some sellers advertise on their own instead of with realtors.
Average home prices and zoning laws affect how popular fractional home shares are in a given town. Grand and Summit counties are particular hotspots for shared homes, town houses and condos, while this model is tougher to find in more conservatively zoned towns like Aspen, Steamboat Springs and Telluride.
Always prepare a legally binding ownership agreement that covers use schedule, a system for paying the bills and an exit strategy if any owners decide to sell their shares down the road. Consult an attorney who specializes in these types of contracts.
Consider hiring an outside management company to handle maintenance and paperwork—especially if any owners plan to rent their shares, advises Sirkin.