various components required for a Bringing it all together
successful fractional development, With a feasibility study in hand,
starting with the most important: you have a blueprint for a successful
location. In this case, the location almost project. Now, the devil is in the
definitely has to be a resort-like destination details. The property and concierge
that is well-known in and of itself, such services must have the look and feel
as Whistler, Cabo, Hawaii, Jackson of a five-star resort. “Nothing less will
Hole, or Vail. Each of these locales do,” Cuthbertson says. “We’re selling
evokes the feeling of a luxury resort a lifestyle, not simply real estate, and
destination, perhaps even exclusivity. those impressions and attention to
Along with location, your property detail are what the buyer wants. We like
has to have that five-star intangible to say we want our buyers to start their
feeling. “A fractional home should be vacation the moment they arrive, not
held to the same standards as a first-class a second later. That means having the
hotel,” says Potvin. “You would expect fireplaces stoked, outdoor and indoor
everything to be fresh, clean, and lights shining, and a gift basket with
pleasing to the eye.” their favorite single malt scotch waiting
Of course, there are exceptions to for them when they arrive.” It’s a much
the rule, but few developers would try different experience than driving up to
to create a fractional destination home a cold, dark cabin in the dead of winter.
in an area without resort-like attractions, Developers often underestimate two
such as a beach or ski setting, or that vital areas: owner’s dues and marketing
select atmosphere, which you can find costs. Far too often a developer will
in an upscale condo in the heart of create an unrealistic annual dues
New York or San Francisco. “Developing structure that won’t cover all the
a fractional property in just any commu- expenses associated with a property,
nity will not work,” Rist says. such as ongoing maintenance and
Harris says he chose to develop repairs as well as replacing all the
fractionals in Hawaii in part because furnishings every five to seven years.
it passed the feasibility test but also The thinking is to keep the dues as
because he had an affinity for the area. low as possible so as not to scare away
Harris worked in management consult- buyers. “But be realistic,” Harris says.
ing for 25 years before becoming a “Don’t underestimate those costs.”
fractional developer, and he wanted to Plus, your prospective buyers will
choose a location that he could appreciate appreciate having a realistic sense
and enjoy. He cautions, however, not of those costs up front.
to let your taste interfere with making On the marketing side, you can’t
a sound business decision. sit back and let a real estate agent list
Hart, Potvin, and Harris all recom- your fractional property on the multiple
mend hiring a fractional consultant or listing service (MLS) and expect buyers
expert to do a feasibility study before to find you. According to Rist, it’s a
pulling the trigger on a project. “Better whole different ballgame. “It’s a relation-
to uncover those hidden landmines ship sell, where you might have to spend
before pouring hundreds of thousands as long as six months or more getting to
of dollars into a project,” says Harris. know a prospective client. Real estate
Generally, a feasibility study, which can agents need to be trained, otherwise they
run from $3,000 to $6,000 for a single won’t know how to sell it.” Cuthbertson
home, will analyze the local conditions agrees. “Marketing is where you need to
and attractiveness of a fractional product, get creative and think beyond an MLS
determine any legal restrictions that listing,” he says. “Create relationships
may apply, and address the viability with fractional jet or luxury car clubs,
of a particular property, lot, or existing restaurants, cigar clubs, and other
vacation home to be turned into a affinity partners. We’ve even teamed up
luxury fractional property with all with our competitors to co-host events.
the necessary amenities and services. The market is so young that co-marketing
“Objectively evaluating your home and helps everyone.”
ruling it out if it isn’t a good fractional Jill Schoff can be reached
candidate is critical,” Potvin says. at jschoff@frax2max.com
growingwealthmag.com I Growing Wealth I July 08 I 23
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