(954) 450-1929 info@condohotelcenter.com

Developer Offers Beachfront Home for a Fraction of the Cost

By Laura Layden
Naples Daily News – March 18, 2007

So what if you’re not a millionaire.

You can still live like one in Southwest Florida. You can buy a Gulf-front mansion on Bonita Beach, for a fraction of the price.

Make that fraction: 1/10.

Longtime builder and Bonita Springs resident Jeff King has started a new venture selling vacation homes by the slice. He calls his business Fractional-Homes LLC and his first three-story estate on Bonita Beach “Casa Playa.”

He puts the home’s value at $5 million. But you can buy a one-tenth share of it for $498,000. That gives the owner the right to live in the home at least five weeks out of the year.

One share of that is gone.

King and his wife will keep one share of the home, which they built for themselves six years ago.

“There are people that can afford it, but may elect to do this because they don’t have to invest as much,” King said. “It does open it up to people who want to say they own a beach house, and they get it at a fraction of the cost.”

The Kings own another home on the east coast, and want to make their estate here a vacation home.

The four-bedroom, 5-1/2-bathroom home offers 4,400 square feet under air. Total square footage is 7,100, which includes an elevated “infinity” pool that appears to reach into the Gulf of Mexico.

The list of special features includes a wet bar, an in-law suite with a kitchenette, an elevator, a wine cellar and a three-car garage. It’s decorated with high-end furnishings and before owners arrive a service will personalize the home with family photos and other warm, homey accents.

Since King started marketing the estate, he’s seen quite a bit of interest. At times, beachgoers have lined up to pick up an information sheet on the project in a box behind the home.

“I know that owning a single-family residence won’t be for everyone,” King said. “We are talking about all the people in the world and there are only 9 people in this particular project that are going to get this opportunity.”

Fractional ownership has worked for private jets, yachts and luxury resort clubs, developed by the likes of Ritz-Carlton and Four Seasons. So why not offer an exclusive home in a prime location? The idea is spreading.

“It is just getting off the ground,” said Dick Ragatz, president of Ragatz Associates in Oregon, a consulting and research company.

Last week, the company hosted a national conference on the fractional interest real estate industry. Of the 525 people who attended, six were starting to sell shares in individual homes, Ragatz said.

It’s an idea, he said, that makes a lot of sense.

Research shows buyers of vacation homes, or second homes, only use them a few weeks out of the year.

“It’s a stupid thing to buy a $5 million home and let it sit empty three quarters of the year,” he said.

With fractional ownership, buyers purchase the amount of time they “have vacations to use, and discretionary income to spend on,” Ragatz said.

“Typically, you get more services than you would if you bought a home by yourself,” he said.

King has started a property management company to maintain Casa Playa for owners. A concierge service can stock the refrigerator full of groceries, rent a limo, hire a personal chef and arrange tee times.

A private jet service has shown interest in partnering with the new company, King said.

“It’s just encouraging that we are getting that recognition,” he said. “I don’t know what that means yet.”

The home service comes at a cost. Owners will pay $12,700 annually to cover maintenance and operating costs, including insurance and property taxes. The concierge service isn’t included, and the cost for it is based on the services requested.

King plans to add more homes to his offerings and expects to partner with an international exchange program that will allow owners in his projects to trade their time and spend it at other luxury homes around the world.

He’s got his eyes on other estates on Bonita Beach and in Key Largo that may be converted to fractionals. He wants to add at least two a year to his offerings.

“We’ve got to find the right properties,” King said.

In a recent survey, Ragatz identified 254 fractional interest projects and private residence clubs. Of those developments, 135 are in active sales and 75 percent of them are in the United States. On average, the developments have 40 units, which can include everything from townhomes and villas to single-family homes.

Twenty-seven percent of the developments are concentrated in three states – Colorado, California and Florida, according to Ragatz. Total sales in 2006 in the shared-ownership resort industry is estimated at $2.1 billion.

Prices range widely in the industry. For private residence clubs, the average cost per share is $247,700.

The share price offered by King is definitely at the upper end, Ragatz said. “There’s not too much being sold at that price level,” he said.

Many of the fractional real estate projects are in ski areas.

In Florida, one of the most visible projects is the Ritz-Carlton Club in Jupiter, where members get 35 days of luxury living in two- and four-bedroom homes and access to the hotel’s golf course and clubhouse.

Joel Greene, president of Condo Hotel Center, headquartered in North Miami, isn’t too confident about the market for single-family homes.

“It just raises too many questions,” he said.

His company specializes in the sale of condo hotels and fractional developments worldwide.

The Ritz-Carlton offers many amenities to buyers, from swimming pools and golf courses to tennis courts and spas. They offer a 24-hour concierge service, and Greene believes it would be impossible to get the same white glove, five-star hotel service at a single-family home. With the personalized service, staff can do everything from unpacking and cleaning your clothes, to making your dinner reservations and buying theater tickets.

Greene called King’s idea “enterprising.”

Fractionals in general are certainly a growing trend,” he said. “They started out in the western part of the United States, but they have been rapidly moving eastward. They are no longer something that people know nothing about.”

Not everyone wants the resort atmosphere that larger fractional developments offer, King said.

Some would prefer the exclusivity of a single-family home, and to not sit “with Billy Bob in the hot tub,” he said.

“You really have your own clubhouse here,” he said of Casa Playa. “You’ve got your own pool and spa, media room and entertainment area.”

And steps away, owners can find parasailing, jet skis, bikes and tennis courts. Golf is a short drive away.

He said fractional developments can charge as much as $420,000 a year to cover maintenance and operating costs. With his property, owners pay less than $13,000.

One of the questions King gets most often is how what he’s offering differs from a timeshare.

What you get with fractional ownership is more time, more flexibility to use the time and a deeded interest in the home, he said.

He’s designed a plan to dissolve the fractional ownership in 10 years. That way the home can be sold the usual way and the owners can get money back – or even make money if the property appreciates.

The only way the home would not automatically convert is if a super majority, or owners representing eight shares, agreed to keep it as a fractional.

“It’s a great exit strategy,” King said. “I wish I could patent the idea. But I can’t.”

Back to Top