Villa La Estancia 
Fractional Ownership on the famous Medano Beach

About Fractional Ownership
Fractional ownership is the up and coming way to have a second home.  It's popular with the emerging affluent baby boomers who want personal services, great on-site restaurants, plenty of first class amenities, beautiful environments, special interests nearby, and...no hassles, maintenance, loud noises or inconveniences.  Who would have thought?

As of March 2004, 151 fractional interest properties have been identified.  Most of them are in ski areas.  Next most popular are golf and beach locations, while approximately 20% are in cities or other special areas.   

Ownership is often accompanied by exchange privileges with 4 and 5 star hotels or the opportunity to have special arrangements with other upscale travel groups.   Ownership in Villa La Estancia, for example, comes with access to 5 star hotel services and travel experiences with such name brands as Abercrombie and Kent, Arizona Biltmore Resort and Spa, Viking Cruises, Moorings Private Yacht Charters, Doral Golf Resort and Spa and more.

Furthermore, ownership guarantees time during prime seasons.  Owners pick so many weeks from each season, thus assuring everyone equal access.  Of course, fractionals in more temperate climates have longer 'prime seasons' so offer more flexibility in planning.

Owning in Mexico
If owning in Mexico concerns you, not to worry.  The Mexican government has established a way for foreigners to "own" property by creating a Mexican Trust.  What this actually means is that a Mexican bank establishes a trust in the "owners" name - good for 50 years.  The bank holds the title, while the "owner" has all the rights and benefits of ownership, including the right to live, rent, or sell. The trust is automatically renewable and can be renewed for an indefinite number of times.

In the case of Villa La Estancia, an 'American Purchase' has been set up which mimics the process of buying property in the USA.  The title, which is issued by Scotia Bank, one of the largest banks in Mexico, is 100% guaranteed by Stewart Title.  Financing is available although more than half of fractional buyers pay cash. The property can be rented, willed to heirs, sold, or mortgaged.

Fractional Value
Is it an appreciating investment?  The crystal ball may have the answer now, but if positioned and managed well, the future is looking rosy.  And although there seems to be a hint of familiarity (something about a timeshare), there are some significant distinctions.  

Here's the view:  In terms of appreciation and resale, timeshares turned out to be a disappointing investment.  Resellers are lucky to get 10 or 20 cents on the dollar.  Vacation planning must be done well in advance to guarantee a booking.  According to Ragatz Associates, an international research and consulting firm, marketing costs account for more than 50 percent of a timeshare's sale price.  Financing costs are huge.

In contrast: Fractional ownership is the fastest growing sector in the luxury vacation market.  Fractional units are spacious and luxurious.  Little, if any advance planning is necessary as weeks are picked at time of purchase.  Owners own more shares so are more vested.  Marketing costs are less than 25 percent of the sales price.  Although rates may be slightly higher, financing is much like that of a second home.  So far - although too early for conclusions - resales are looking good.   Ragatz reports 25 million in resales lat year and the majority sold at a higher price.   

Other investment income is possible, especially in popular locations, with rentals.  At Villa La Estancia, owners can rent out their property on their own, or utilize the rental program operated with the Villa's reservations system.

Hobson Ferrarini Associates, who researched and published the report, Industry Overview for the Luxury Fractional And Private Residential Club, believe that "because marketing costs are significantly lower than timeshare, and because the concept has taking on an aura of exclusivity, the opportunity for investment appreciation or, at a minimum, value retention appears excellent".   

Encouraging news from Ragatz state that 96% of fractional buyers are satisfied with their purchase.  The potential hazard to appreciation is overbuilding.  This has already happened in Telluride, Colorado.

And for Cabo San Lucas?  In the last 7 years, the Mexican government has invested more money into the infrastructure of Cabo San Lucas than any other resort destination in the Mexican Republic.  Real property prices have increased more than any other property in Mexico.   

A well-chosen investment in a fractional property could easily be the envy of property owners from now to eternity.

The Villa La Estancia is also available for an all-inclusive vacation or nightly lodging.  Take the photo tour and request a complimentary CD.  Or find a Vacation Package.

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