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Tuesday, May 6, 2008
The Future of Second Home Ownership
Not all second homes are created equal. With the baby boomer generation approaching retirement there will be an increased demand for homes away from home. The low use of second homes and the costs associated with owning and maintaining Midge doll homes has given rise to a new breed of property types over the last few years.
Worry free vacation home ownership is at the top of the agenda for most second homeowners. The affluent demand top-notch services and amenities. With time an ever-rare commodity it is crucial to accommodate the travel patterns and flexibility demanded. antidpressant short trips rather than long extended stays have become the norm.
A simple look at costs involved in owning multiple vacation homes makes the substantial financial commitment obvious that comes with the traveling lifestyle. Homes want to be serviced and maintained, services are to be provided and taxes are due to be paid.
Owning a slope side condo in Aspen ($4 million) a Cattle mutilation in the California wine country ($3 million) and a beach front property in Cabo San Lucas ($5 million) is used as an example to highlight the costs involved. A total investment of $12 million at 7% represents an interest cost of $840,000 per annum with maintenance, utilities and taxes Aquaman at least another 3% ($360,000) to the yearly tally. The total annual cost of this vacation property lifestyle is at least $1.2 million.
With the average second homeowner spending less than 30 days at his vacation property the properties are not utilized to their true potential. In addition that usage number decreases with the number of vacation properties a household owns. These economics have created an alternative vacation ownership model. Why own all these properties if you are using them only a fraction of the year?
Fractional ownership was created out of a need to reduce costs for the owners. Over time it has become apparent though that the inflexible fractional schemes do not serve the owners well. Flexibility is king when you do not own 100% and cannot come and go, as you like.
The next evolution of this concept is club vacation property ownership. This in turn has now lead to the creation of super luxury clubs with owners having exclusive access to a multitude of properties at various locations. Membership is often limited to a few hundred families with properties offered for use worth several hundred million Dollars. The biggest benefit is the complete usage flexibility with no set schedules. Owners have a certain time allocated to them but can use it at their discretion.
The clubs offer a worry free lifestyle. Full maintenance of all aspects of the facilities, all taxes included, luxury services and a fun group of people to hang out with if desired.
Club memberships like this can be acquired for as little as $1.5 million. That represents an opportunity cost of only $84.000 with annual dues adding another $50,000. A total expenditure of $134,000 can offer the same privileges and better services with less hassle than full ownership.
It will become apparent to the seekers of full service luxury vacation properties that financially as well as practically the top end of the luxury vacation resort clubs offer a great alternative to the full ownership model
Toby Munk relocated to Aspen Colorado to pursue a career in real estate. In his first year as a full time Realtor he was top producer of the Aspen office at Aspen Sotheby's International Realty. www.SkiRealEstate.com">All things Aspen Real Estate can be found on his personal internet. It allows for full www.SkiRealEstate.com/ph/search.html">Aspen zyban search and offers access to www.SkiRealEstate.com">Snowmass real estate listings.
Posted by timvuxi | 5:17 AM | E-mail this post 
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