Fractional ownership – is it right for you?

Buyer demand and interest in the Vail Valley and Eagle County continue to outpace most other U.S. regions. While interest rates and economic uncertainty have potential sellers staying put and creating limited inventory options, buyers are still looking. What is an interested buyer to do?

Many buyers are opting for fractional ownership to get a foot in the door. Over the past five years, fractional ownership purchases in Eagle County have risen in transactions by more than 55% and sales volume has increased from $15.6M in 2018 to more than $53.5M in 2022. 

Fractional ownership is deeded partial ownership shared among owners. It is a viable, part-time residence/ownership opportunity for those who consistently spend time in the Vail Valley year after year.  Fractional owners often decide to buy a year-round property here after several years of vacationing in the valley. With fractional ownership, there’s the added benefit of being able to exchange your time/week(s) to affiliated properties around the world.

While not an investment, fractional ownership does allow people to pre-purchase and select their vacation time with many added benefits versus a hotel or renting a condo. Your property is fully cared for by an on-site management company, so you can enjoy your vacation in your fully furnished condo, without worrying about maintenance, repairs, housekeeping, utilities, insurance, taxes, and refurbishing. 

Owners not only come back every year to a familiar place, but you also have the added benefit of your home away from home with the space and convenience you need for a relaxing vacation. Your property includes all the usual hotel amenities such as parking, fitness club, spa, pool/hot tubs, restaurant/bar, room service, private transportation, ski valet and higher-end concierge services. 

To determine if fractional ownership is right for you, Janet Boeser and Tisa Olsen, broker associates with Berkshire Hathaway Home Services Colorado Properties provide some key points and questions to consider.  

What it costs

Entry level costs for a fractional unit in the Vail Valley range from $25,000-$650,000 for a two- or three-bedroom condo, depending on the week(s) and property. “When you consider the cost of renting a condo in a premier ski-in/ski-out location in Vail or Beaver Creek, buying a fractional is a cost-effective way for people to vacation in the Vail Valley,” said Olsen.

A multi-week, fractional owner herself, Boeser notes there are a variety of properties and price points in Vail and Beaver Creek and many of these are affiliated with international hotel brands. These include The Ritz-Carlton Vail, Sebastian, Four Seasons, Park Hyatt, Hyatt Mountain Lodge, and Westin. Owners can then elect to use their vacation week(s) or exchange on a vacation exchange network, such as Interval International owned by Marriott Corp. 

“Fractional ownership is really the opportunity to manage vacation costs against rising hotel rates, which typically go up every year,” said Boeser. “Once you make the purchase, you are only responsible for the annual maintenance and/or membership dues depending on the property and club options.” 

“Not long ago, the average rate for hotels in Beaver Creek were $5,000 to $6,0000 per week,” said Olsen. “Now, they’re averaging $10,000-$20,000 per week. Essentially, owners are pre-paying for their future vacations, with guaranteed weeks and options for additional discounted nights based on availability.”

Buying a fractional vs. a rental property 

To determine if fractional ownership is a good option for you and potentially, the right type of property for you, Olsen and Boeser recommend answering the following questions:

• How much time do you want or expect to spend in the Vail Valley? 
• Do you have other destinations on your travel list where you might exchange weeks?
• Do you prefer managing the costs and upkeep of your own property or do you enjoy having this taken care of for you?
• Do you want a real estate investment or more flexible vacation options?
• What type of properties do you like to stay in and what would you spend on an average trip?

It’s important to note that buying a fractional residence is more about a vacation lifestyle than longer term financial return. Vacation ownership is ideal for people who prefer to stay at higher end resort properties. However, if you’re looking to spend more time, such as a several weeks to a few months a year in the Vail Valley, then buying a home or condo and putting it in a rental program might make more sense.  The latter option is also more conducive if financial gain is also a priority.

Pros and Cons:

Pros

Variety of price points and properties

Confirmed weeks and price year-to-year

Deeded ownership shares and title

Opportunity to exchange

Potential rental income

On-site maintenance and cleanings

Familiar furnishings 

Extra living space

Cons

High upfront costs

No financing 
Not a financial gains investment 

Premier weeks cost more

Michael Slevin is the president and owner of Berkshire Hathaway HomeServices Colorado Properties, started by his father, John, 52 years ago. The company has grown to 12 offices in 10 Western Slope and mountain resort communities, spanning from Grand and Eagle Counties to the Western Slope. For more information on fractional ownership and opportunities in the Vail Valley, visit bcfractionals.com or call 970.306.6678.