Fractional Ownership beach house in NJ

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Fractional Ownership beach house in NJ

Ben Dubinski
Rental Property Investor · Member since 2019 · 6 posts · 0 votes

Does anyone have experience with purchasing a fractional shares of a vacation home? There is a duplex on the beach with a 10 week share, offered for $145k. 3 bdrm, 2 bath 1000 sq feet. A very nice looking home that based on the location, if sold as one entire property would likely be well over $1MM.

How does financing this work? Will it likely appreciate over time, perhaps in the hopes of selling for a gain, to then buy our own single family vacation home?

Also the potential rates for renting out weeks for short term vacation rentals at this property would be very high. Our family has rented in the same town, but not nearly as close to the beach, for $5200/ week in the past couple years.

I feel like this is a great early entry into owning a beach vacation home without the exorbitant pricetag and maintenance worries. What might I be missing?

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Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y

This idea sounds like a trainwreck ready to happen.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    How are you going to market only 10 weeks every year?

    What are maintenance, PM  and yearly fees?

    I wouldn't do this for a STR. I see too many potential issues.

    I would buy my own place.

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  • Ben Dubinski
    OP
    Rental Property Investor · Member since 2019 · 6 posts · 0 votes
    6y

    @John Underwood this property is the first house on the beach, in a vacation town that most of the houses on the beach are several million dollars. I don't feel like renting it would be that hard. The maintenance fees cover the cleaning and upkeep. In a perfect world, I wouldn't need to rent it, but frankly $5k a week would be great and help cover expenses.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Ben Dubinski:

    @John Underwood this property is the first house on the beach, in a vacation town that most of the houses on the beach are several million dollars. I don't feel like renting it would be that hard. The maintenance fees cover the cleaning and upkeep. In a perfect world, I wouldn't need to rent it, but frankly $5k a week would be great and help cover expenses.

     I personally don't think buying a fraction of a property where you can only rent it for 10 weeks is a solid investment. Down the road you may regret this decision and have a hard time selling this piece of the property.

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  • Lauren Kormylo
    Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
    6y

    Most of the fractional vacation homes I've seen for sale have furnishings that leave something to be desired, worn hotel class stuff. You won't be able to replace them, paint, or decorate how you want.   And they all have huge maintenance fees when you add up the entire year's worth.  Those are the main blocks to resale, just like timeshares.  The price of this one seems too good to be true.  10 weeks is an odd amount.  Are these 2 week blocks that someone bought 5 of?  Are they scattered throughout the year, or maybe just during the off season?  Make sure your quoted maintenance fees cover the entire 10 weeks.  

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  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y

    This idea sounds like a trainwreck ready to happen.

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    I was thinking dumpster fire...Sorry @Ben Dubinski, but I think you will find most of us will feel this is not a good way to go. What if you don't get your numbers? What if you have to sell? I can't imagine a fractional ownership would be a hot seller.

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    6y

    @Ben Dubinski

    Which 10 weeks are for sale? Is it a specific 10 weeks, or are the weeks on a rotational basis. In many fractional real properties, prices can vary significantly based on the specific weeks you buy.

    Private Mortgage Financing Partners, LLC
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