Franctionals: A fraction of a home for a fraction of the price
A development on Little Sebago Lake is offering waterfront property at a fraction of the usual price in a shared ownership arrangement that is now making its way from the tony ski resorts of the Rocky Mountains to Maine’s lakes and ponds.
Sunset Cove, located in Brown Cove on the eastern shore of Little Sebago in Windham, is the first property from the Maine Lakefront Club. Instead of purchasing a home outright, club members buy a share and split time with other shareholders under a deal developers say is preferable to a timeshare and a better fit in today’s economic climate, when the waste of resources and money is looked down upon by even those who have an abundance of both.
Fractional ownership has become more popular as the cost of second homes rose over the years. According to Realtor Magazine, it is a small if growing trend in the real estate market, and analysts said the arrangement is becoming more popular.
“Fractional ownership reduces hassles and gives buyers more amenities and less maintenance responsibility than would owning an individual home,” said David Hehman.
Also, while second homes, with their fast rising values over the last two decades, have been great investments in the past, the values have now leveled off, and many analysts say the boom times are over, said Dennis Draper, a project manager for DCP International, a Dallas-based firm partnering with a local couple on the Sebago Lake waterfront home. Without those rising values, full ownership of a second home does not look as attractive, he said.
The Maine Lakefront Club is the brainchild of Perry and Melinda Williams of Falmouth, and Sunset Cove is their flagship property. It is a $1.5 million, 4,500-square-foot home with four bedrooms, five-and-a-half baths and 150 feet of lake frontage. One-eighth shares will be $275,000, and there are annual dues of $10,000. It is the first property in Maine, Williams said, to be sold under a residence club agreement, and it is the first of many planned by the couple.
“Our goal is to have 20 of these,” said Perry Williams, who hopes to spread those out among some of the most desirable lakes and ponds in Maine. “We think it is going to take four to five years to get to that level.”
While residence clubs may be new to Maine’s lakes, they are no stranger to the plush ski resort areas found in Utah, Colorado and elsewhere, said Draper.
The first residence club was started 20 years ago by Steve Deering at the Deer Valley Ski Mountain in Utah. Ski resorts thrive on “hot beds,” Draper said, filled rooms that result in more lift tickets and more food and beverage sales.
“They found that people using these second homes were only using them two to three weeks a year, and they were too nice to rent so they were just sitting empty,” Draper said.
Residence clubs, which can now be found in varied locales, from Manhattan to Florence, Italy, were launched to give people their two or three weeks at a ski resort while ensuring that the homes would be filled at all times. At ski areas, owners typically buy a one-sixth share, guaranteeing them at least two weeks out of the 12-week peak ski season while taking away the hassles that come with worrying while your second home is empty 90 percent of the time.
“You don’t have to mow the lawn. You don’t have to worry about the pipes freezing or whether you left the iron on,” said Williams.
Fractional ownership does come at a premium, Hehman, the analyst, said. But it comes with a lifestyle. The Maine Lakefront Club offers a variety of concierge services, from pre-arrival grocery shopping to dining reservations. Boats, canoes and kayaks can also be obtained.
The arrangement also takes away much of the risk associated with purchasing a second home in an exclusive area, Draper said.
“The total cost of the membership would be less than the down payment on that home,” he said.
The financial aspect of a fractional ownership, which has also spread to such things as jets and yachts, has been appealing to people, said Draper. Interestingly, though the original intent was to allow for people who could not otherwise afford a place at a ski resort to purchase a share, clubs have found that most of their members do have the money to buy a full home but choose not to, he said.
In contrast to a timeshare, which locks you into a certain week, residence clubs allow members to change weeks, which are chosen through a system that gives priority to different members each year. The remaining weeks can be picked by members based on availability.
“Usually, it’s the flexibility of the club that sells it,” said Draper.
Williams, who developed properties under fractional ownership, which offers fewer services than a residence club, at the Sugarloaf and Sunday River ski areas in Maine, saw the same scenario facing the ski areas play out on Maine’s lakes, like Sebago, where he and his wife once lived, or Raymond Pond, where they now have a home, and decided the inland water could use a similar system.
“It just seemed like a natural fit,” he said.
However, the scenario may play out a little differently on lakes in Maine. Owners of vacation homes at ski areas may visit there from all over the country, but the same may not be true of Maine.
Most owners of second homes in Maine live in nearby states like Massachusetts, Connecticut and New York, all of which are within a reasonable drive of Maine, said Jim Fitzgerald, a real estate agent in Kennebunkport. They could easily make the trip whenever they wanted to, he said.
But the Williams also plan to offer more than just one home on one lake. They want to eventually get properties on Sebago, Highland and Long Lakes, then up to the Rangeley Lakes and Moosehead Lake area. Owners of share in one property could pick up weeks at other sites if they are available, allowing members to get “a variety of experiences” for their second-home dollar, Williams said.
“We are looking for the best spots,” Williams said of his plans for the future. “This is one of the best spots on Little Sebago.”
However, residence clubs and fractional ownership are not for everyone, Williams and Draper said. Sharing ownership with parties they do not know well may not sit well with everybody, and others may want access to their property without notice or having to coordinate with the club, Williams said.
“We see how people are thinking about using it, and we see if it fits,” he said.
The couple has been putting the club together for the past year, and the first home is almost complete. In that time, they watched as the credit market, and the economy as a whole faltered.
If anything, Perry Williams said, the changing economy makes a residence club more attractive. Members are taking much less of a financial risk while getting what is arguably the same experience.
“We think it is going to make even more sense as this new economy evolves,” said Williams.
By Ben Bragdon
