Fractionals Q & A

Posted on November 8, 2019 by Lisa Knorr & Amy Sand

1.  What are fractionals?

Fractional ownership of vacation homes allows you to enjoy a designated number of weeks or months of home ownership privileges in Big Sky or our surrounding areas but at a fraction of the cost of whole ownership.

2.  Who are fractionals really for?

This type of real estate arrangement is ideal if you want the benefits of owning a second home located in an amazing location like the Rocky Mountains of Southwest Montana but can’t justify the investment because of limited use.

3.  How long is a typical fractional share?

Most fractionals are between two to 13 weeks. Those don’t necessarily have to be consecutive weeks. Because there are far fewer owners of each individual property than say your typical timeshare, you’ll have a lot more options regarding when you can use the home.

4.  Who manages the fractionals?

Typically, fractionals are usually self managed. They are governed by recorded declarations.

5.  How do fractionals differ from timeshares?

Fractionals tend to be larger homes or condos, usually two to four bedrooms. Timeshares are typically for one to two weeks per year.  Fractionals offer from two to 13 weeks, and those don’t necessarily have to be consecutive weeks. Fractional ownership is a method of property purchase involving several buyers, typically 6-12. The main difference between fractional ownership and a timeshare is in the way actual equity is distributed. In a fractional ownership arrangement, the purchaser actually owns a piece of equity in the property. If the property goes up in value, the fractional owner's share of the pie also becomes more valuable. With a timeshare, ownership is not distributed. The owner purchases only weeks or months of enjoyment in a property, and these weeks or months do not rise and fall in value with the value of the property. The title is still owned by the principal owner.

6.  Why should I buy a fractional instead of a wholly-owned second home?

Most people who buy a fractional recognize that they won’t be spending more than a couple of months a year at their vacation home.  With a fractional you can get the quality and level of luxury you want and only pay for the “fraction” of time you actually plan to use the home.

7. Can you trade or rent out your time?

In some cases, yes, but you will want to check the specific guidelines for the property you’re considering.  Most fractionals also participate in a reciprocal usage program similar to timeshares in which you can trade weeks and locations.

8.  Can more than one individual or family own a residence interest?

At most properties, the answer is yes. In addition, the extended family of the owner including children, grandchildren, siblings and parents can use the residence and are entitled to use the property.

9.  What are ownership costs of a fractional?

Typically speaking operating costs ie property taxes, utilities, HOA dues, general maintenance, etc. are divided equally between the owners.


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