Fractional Ownership and True Equity

When considering the purchase of a vacation home in a residence club, equity (and the question of whether or not you’ll have it) may take a backseat to visions of sharing vacation memories with your family or having the flexibility to stay in exclusive vacation homes at various desirable locales throughout the year. "Equity" might sound considerably less sexy than "experience" or "exclusivity." However, it is actually one of the most significant advantages to owning a fractional home within a private residence club like The Élan Collection.

“The ‘equity' or deeded interest in an Élan property carries many of the same attributes as whole ownership—but for a fraction of the price,” said Stan Tonkin, vice president of international marketing and sales for The Élan Collection. “When you engage in a deeded real estate transaction with Élan, you will have use in perpetuity.”

Owners also have control of their deeded interest. It is sellable, and not to mention, willable. And, it is a way to enjoy a luxury vacation experience without the expense, responsibility and (sometimes) hassle of owning a property solely. Here is how Tonkin tells it:

“The Élan Collection is a true equity program,” he said. “We try to minimize risk as much as possible. Once the shares in a specific Élan residence are sold, that property is free and clear of encumbrances.”

The amount of time you can use your Élan property is proportionate to the amount of money you invest. For example, if you purchase a share in The Coral House in Turks and Caicos you will have four weeks of guaranteed use, and you have the option of exchanging guaranteed use time with other property owners in different locations through Élan’s voluntary reciprocal use trade program. And of course, you’ll enjoy all of the resort-style amenities you’ve always dreamt of-- 24/7 concierge services, travel accommodations, onsite luxury SUV, private chef and placement of personal items upon each visit.

Just how important is equity to a vacation homebuyer today? Is equity worth more or less? Feel free to share your thoughts with us!

5 Reasons to Buy a Fractional Vacation Home This Year

The month of September typically marks the end of summer and the beginning of fall. As the weather cools and the leaves change, you might be tempted to make your summer last forever by purchasing a vacation home. However, you might feel some trepidation since the economic outlook hasn't been especially bright lately. Is it the right time to take the plunge? Will a vacation home cramp your lifestyle? And what about purchasing a fractional vacation home...is that a smart alternative?

If you find yourself on the fractional fence this fall, here are five reasons why vacation opportunities like The Élan Collection make more financial sense than you might think:

1. YOU WON'T BE LOCKED INTO ONE PLACE YEAR AFTER YEAR.

As much as you love skiing in Aspen every winter, sometimes you want to vacation in warmer locales like the Carribean or Sourthern California. Since The Élan Collection combines the benefits of fractional ownership with the advantages of a network of destination properties, Élan home owners won't be limited to vacationing in only one city. It's all about having "the option of exchanging guaranteed use rights," said Stan Tonkin, vice president of international marketing and sales of The Élan Collection. "It’s an attractive opportunity because Élan is not just another single residence fractional opportunity. For people looking to buy a vacation home in the current real estate market, it makes a lot of sense."

2. YOU WON'T HAVE TO WORRY ABOUT MAINTAINING A SEASONAL PROPERTY.

Vacation properties frequently sit empty for weeks and months at a time--but the beauty of going Élan is that the company manages all of the typical responsibilities associated with home ownership. You won't have to worry about regular maintenance issues like landscaping or cleaning the property, or more urgent issues such as a broken water main. "When you are away from your Élan home, you will have total peace of mind that the property is well taken care of," added Tonkin. "When you arrive, it will feel like you never left."

3. YOU ARE NOT TYING UP ALL OF YOUR FINANCIAL ASSETS IN A PROPERTY YOU WILL ONLY REALISTICALLY USE 4-6 WEEKS A YEAR.

If you've done your research, then you already know this is the No. 1 mantra for The Élan Collection and the fractional industry, in general. Since typical owners of vacation residences use their properties only four to six weeks per year on average, The Élan Collection is "a significant 'smarter buy,'" said Tonkin. "Our mantra has always been, 'You can enjoy the same realistic use you would enjoy with a comparable whole-ownership residence...but at a fraction of the price.' Plus, you can retain appreciation potential and enjoy club-level services and amenities."

4. YOU'LL HAVE THE BEST OF BOTH WORLDS.

You might be secretly pining away for that gated private villa by the sea, but there is also a part of you that still wants the ease of concierge services and amenities at five-star resorts. With Élan, you can vacation with absolute privacy in your 12,000 square-foot beachfront villa and still enjoy the five-star perks: 24/7 concierge services, travel accommodations, onsite luxury SUV, private chef and placement of personal items upon each visit.

5. YOU CAN FIND TOO-GOOD-TO-PASS UP DEALS.

Several market conditions make buying a fractional vacation home a smart move right now. For starters, the cost of fractional ownership is typically less than comparable resort or local daily rental prices. Vacation home affordability, in general, is also at an all-time high. While home prices have come down overall, Dick Ragatz, founder of the Ragatz Associates, observed earlier this year that the average price per fraction dropped around eight percent in 2009, compared with an estimated drop in the price of whole ownership vacation home prices of 20 to 25 per cent for the same period. And deals abound: for example, The Élan Collection is currently offering a special end-of-summer 15 percent off discount through October. (Email stonkin@elanprc.com for more information).

Can you think of any other reasons why it's a smart choice to purchase a fractional vacation home this year?

4 Bright Spots in the Economy

Fortune recently highlighted four economic bright spots, and assessed what kind of a lasting impact they might have on the economy: U.S. agriculture, U.S. corporate buying, the auto industry and manufacturing growth. Reporter Nin-Hai Tseng wrote:

"Good economic news has been hard to come by lately, but not all is doom and gloom in America these days. The end of summer ushered in a few signes of progress in some of the unlikeliest corners of the economy. They are no guarantee that the good times are around the corner, but they do provide a helpful reminder that this slow recovery is exactly that: a recovery."

Will manufacturing growth be a boon for the vacation home ownership market? "It usually leads economic recovery," said Stan Tonkin, vice president of international marketing and sales for The Élan Collection. "Luxury vacation homes are discretionary purchases, so consumer confidence plays a big part. It's difficult to predict, but if history is any indication, then the vacation home market would naturally follow manufacturing growth."

At least the numbers are on Tonkin's side: earlier this year, NAR reported that vacation-home sales rose 7.9 percent in 2009. "Historically, people become interested in buying a second home in their mid 40s," said NAR Chief Economist Lawrence Yun at the time. "The large number of people who are now in their 30s and 40s will dominate the second-home market in the coming decade with a strong underlying demand, although sales in a given year will vary depending on the economy."

Do you think Fortune's economic bright spots can boost consumer confidence? Are you seeing any signs of movement in your local vacation home market?