SECOND pLACES:
New Fractional Ownership Concept Makes Owning a

Vacation Home Affordable & Easy
 

After about 10 years of renting vacation homes at the Sun River resort in Oregon, Tahni Hamilton and her husband dreamed of buying a home there of their own. “But the only places we could afford weren’t nice or roomy enough to bring our family and friends,” she explained.

When they heard about Second Places, a Corvallis-based company that sells fractional shares of attractive resort homes, it turned out to be the ideal solution.

Second Places caters to Northwest area residents like the Hamiltons who would love to have a vacation home nearby to escape for a quiet retreat or to enjoy the great outdoors – but can’t justify paying for a second home that would sit vacant for much of the year and don’t want the time-consuming responsibility of managing a vacation rental home on their own.

Second Places offers a cost-effective, sensible alternative by allowing people to become partial owners of resort-area homes and share the costs with other owners, without any of the hassles that vacation ownership usually entails.

For the Hamilton family, it was the perfect answer. “We thought about buying a house and then renting it out,” said Tahni. “But we realized that we’d have even less flexibility in using it ourselves, because the times that we would most want to use the home are also the peak times that you would most likely be able to rent it. Plus, you have all the hassles of owning a rental property. We were looking to get away from the stress of our daily lives, not something that would add more complexity.”

The relatively new concept of fractional home ownership has become especially popular among the so-called “mass affluent” population – households with $120,000 to $200,000 annual income – which includes relatively active, healthy retirees looking for a special getaway, as well as busy families who seek a place to spend quality time with their children or friends.

Many of these people have been drawn to this new model of shared ownership as a preferable alternative to the frustrating drawbacks and limitations of time shares.

Fractional home ownership is not a time share and offers a very different experience.  Vacation time shares give owners pre-paid access to a unit within a certain resort or vacation property, but owners still must make advance reservations and there’s usually no guarantee they will get the specific unit or timeframe they prefer. To get a desirable unit during peak seasons or holidays often requires making reservations a year in advance.

In contrast, owners who share a Second Places home have equal and guaranteed access to the home throughout the year, and always know far in advance what the schedule is.

In most cases, people interested in buying a second home view it as something they will use in addition to, not in place of, going on vacation to special destinations.

“The people we deal with who want to own a second home are still going to go on vacation to new places, and enjoy that experience as well,” commented Steve Shields, president of Second Places. “But they are also looking for a home that they can call their own, and return to over and over again with their family and friends.

“We find that our concept of offering high-end resort homes that are beautifully outfitted and furnished, appeals to families who want a relaxing, comfortable place that really feels like their own home. And because they’re paying only a fraction of the cost, they can still afford to take special vacations to other places,” Shields added.

Deborah Spofford, a designer and author who appears regularly on AM Northwest, is a partner in Second Places and professionally decorates the homes to be attractive but still retain a cozy, “home away from home” ambience.  “It’s upscale enough to be very appealing, but also very family-friendly and comfortable,” explained Spofford, who has two children of her own.

Steve Shields and his two business partners started Second Places with a vacation home in Sun River that was purchased, remodeled and outfitted specifically for several families to share.

“With people’s lives getting busier all the time, so many families are yearning to have that special getaway retreat, but can’t justify the cost. They see this shared vacation ownership concept as their ticket to a high-class resort home without the high price.”

The Hamiltons, who have children ages 2 and 5, say that owning part a Sun River home has turned out to be even a better experience than they expected. 

“We always bring another family or friends so that our kids have someone to play with, or we bring our nanny to watch the kids while my husband and I pursue our own activities as a couple, like hiking, skiing or mountain biking,” Tahni said. “The house is plenty big enough and has a perfect layout for multiple families.  And there’s a whole area set up for the kids to play, so the adults can even have some quiet time visiting on their own.”

Several companies have cropped up recently to capitalize on this trend, taking various different approaches.  One is a club model, like Signature Destinations or Exclusive Resorts, which charges a one-time membership fee ranging from $125,000 to $375,000 plus annual dues for use of their resort home properties in popular vacation destinations like the San Juan Islands, Kiawah Island in South Carolina, or Jackson Hole, Wyoming.

Newer entrants like Second Places of Corvallis, Oregon, buy or build high-end vacation homes in established resort areas like Sun River or Black Butte, Oregon, and then sell fractional shares in that specific property.

Industry experts say that people are most likely to take full advantage of a second home when it is located within three hours’ travel time from their primary residence.

“I always imagined having a vacation home in an exotic locale, but it is much more enjoyable to have it only two hours away,” said Boyd Lyon, a Corvallis resident who bought a share of a resort home in Black Butte Ranch as a getaway where he can spend time with his wife and two teenage-sons.

One of the key differences among the various shared-ownership approaches is that destination club members reserve a week at one of several properties. This gives them more choice of destinations, but the drawback is that, as with time shares, club members are not guaranteed of getting the home they want at the time they choose.

With Second Places, all owners have guaranteed access to the specific home they have purchased according to a set schedule, and holidays are rotated annually to ensure that everyone gets equal time for special occasions.  Owners are welcome to trade weeks among each other, keeping track through a special online scheduling tool that the company developed.

Owners of shared homes say they like the fact it’s so easy to slip away to a familiar place where they feel at home, without having to make advance reservations or spend lots of time preparing.

“We find that our shared ownership concept, offering high-end resort homes that are beautifully outfitted and furnished, appeals to families who want a relaxing, comfortable home that doesn’t feel like your typical rental property, ” commented Shields. “We’ve also found that most of the club resorts focus almost exclusively on golf enthusiasts.  We tend to attract people who have a variety of interests, and are looking for more than just a place to play golf.”

Another key difference among shared ownership models is what choices members have if they choose to opt out at a future date.  Destination clubs typically offer an 80 to 100 percent refund if members decide to quit.

Companies like Second Places allow owners to sell their share of the home at the going market rate, which allows them to take advantage of any real estate appreciation.

Time shares appreciate at a rate much slower than regular vacation homes, and the resale market is often flooded with units priced below the original cost.

“From a financial investment perspective, our approach is the same as any real estate transaction. Shares in the homes will basically appreciate at the same rate as the other properties in the area.  Within the Central Oregon region, home prices have been climbing steadily, which makes these a good investment,” Shields explained.

For many owners, the financial advantages are more of a bonus than the primary driver for owning part of a vacation home.

“For us, it’s really about having a place to spend time with family and friends,”
said Tahni Hamilton. “The kids love everything about the place – from the bunk beds and hot tub, to making snowmen and sledding. And my husband and I love having a place where we can tune out from our busy work lives when we need to, and enjoy doing outdoor sports activities as a couple.”

“It just transports our family into this state of relaxation when we go over there,” she added.

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