Buying a Piece of Paradise
- Jan 26, 2008
Today’s market is primed for real estate deals–if you’re going to buy a second home, it seems now would be the time.
For some, a vacation condo is the perfect second property. And we’re not just talking beachfront units: The New York Times reported a few years ago that second homes near popular colleges, especially in the Southeast, were big sellers because alumni were anxious to buy a piece of their past–and a place to crash after big games.
So why–if buying a condo or townhouse is more popular and potentially less expensive than ever–would someone buy part of a condo?
Because it’s easier. And, actually, much cheaper–which is why homeowners are embracing partial ownership.
Earlier this week, when visiting family, I stayed in a destination resort in Daytona Beach with my parents (the lobby, where I posted some of this week’s blogs, is pictured, left), who–after owning just one house for 30 years–surprised my sister and I several years ago by announcing they had purchased a membership in a resort-based destination club. For an initial fee and yearly dues, they receive a set number of points, which they can bank or use on a number of condos in the U.S. and abroad.
My mom doesn’t like driving on highways; yet suddenly, my parents were international travelers. They went to the Carolinas, northern California, Scotland, the Caribbean. They took friends along with and sent my sister and I postcards from places like London and St. Maarten (whom I believe is the patron saint of taking ridiculously nice vacations without your kids.)
It’s not the most luxurious destination club–the nation’s wealthy pay tens of thousands to join five-star programs; my parents paid less than $5,000 to join–but it is a simple way to travel. You have maid service weekly; you don’t have to clean the unit before leaving, or update it when the paint chips, or pay taxes on it. You can get last-minute deals on rooms if you have a sudden need to travel. Mom and Dad love it.
And apparently, they’re not alone. According to Bob Waun, author of "Besting: Better Nesting," the U.S. housing market is trending toward a new type of homeownership as Baby Boomers buy second homes with shared and fractional ownership to vacation in.
The Vancouver Sun says that includes condos, timeshares, destination clubs–all kinds of low-responsibility real estate.
But back to our original question: Why buy part of a condo when you can own a whole one?
- It’s cheaper. Compare buying a vacation condo you’ll keep for a decade for $187,100–which is the average price for a Daytona Beach condo, according to the Florida Association of Realtors–to joining a resort club, which, including a $5,000 start fee, may cost $25,000 for 10 years for dues. Unless you know you will be using the property for more than a couple of weeks a year, the investment might not be worth it.
- It’s easier. You not only spend less on a partial property investment, you save on any extra costs full homeownership can add–maintenance, association fees and special assessments and more. You don’t have to worry about respackling, updating bathrooms, dealing with weather damage or anything else. There is no need to clean the unit upon arriving because it has been empty for a year or to scrub it before you leave.
- And, of course, it gives you more options. With a timeshare, you have one vacation spot you’re tied to for the length of your ownership. Resort and destination clubs allow members to use properties around the world.
Fractional ownership offers a number of advantages; it is also sometimes considered personal legal property. (As my parents constantly tell me, they can will their membership to my sister and I, presumably so that when we have children, we, too, can send them taunting postcards from around the world.)
However, partial ownership isn’t for everybody–and there are some things to consider before you buy a bit of a property instead of the whole thing.
Join us Monday for the second part of our vacation home series, which will discuss what to ask yourself–and what to ask the programs–before determining what degree of homeownership you want in a second home.