Fractional Ownership Faring Well in Region
REGION – National resort sales consultant Tom Goetschius compares Tamarack Lodge on East Grand Traverse Bay to Disney World – just without the ears.
Seemingly going against the grain of the rest of the housing market, the waterfront resort's fractional ownership, or shared-housing occupancy, part of its business is booming.
"During the first six months of this year, we sold the same number of units as all of last year," says Tamarack Lodge developer RC Hermann. "We're at 60-percent capacity right now."
He goes on to add that the numbers are likely going to climb higher after summer; the fall foliage season is the busiest for sales at the resort.
Fractional ownership, a billion dollar business, is different from timeshares in that buyers own real property and are deeded a certain percentage of a unit. At Tamarack, it's typically one-eighth of what the suite is worth with rights to use it for up to six weeks a year. With a traditional timeshare, buyers only purchase "weeks" at their resort and never actually own any property.
So how did Tamarack go about doubling its sales in this economy?
Hermann offers two answers: First, resort sales and rentals remained steady during the recession. Second, he brought in Goetschius.
The Orlando-based consultant has been in the sales industry for 25 years and has worked on more than 60 shared ownership projects across the world.
He says his job is made a lot easier because Traverse City sells itself.
"I told my sales staff the first question they should always ask is, 'What brings you to Traverse City?'"
The answer typically brings up emotional memories, like summers with grandparents, fishing on the lake, and childhood vacations.
Then, it's a matter of playing to Tamarack's strengths.
"Fractional ownership here is like a second home, but it's hassle free, and has the amenities of a fine hotel," says Goetschius.
During the recession, Tamarack allowed buyers to purchase smaller shares than is typical, allowing them to spend as little as two weeks at the resort. That increased the number of people who could afford to buy.
Since the economy began to improve, Hermann says potential buyers, on average, take one month to make a decision, compared to five months a few years ago. The prices of the fractional shares, however, have remained steady – between $70,000 and $119,000 each.
"During the recession, people still wanted our product," says Hermann. "But they couldn't make a commitment, because they weren't sure they would have a job next year."
Another benefit Tamarack offers is the ability to turn weeks at the resort into "points" which can be used to buy time at other resorts through the "Interval International Gold Exchange." That means buyers aren't required to spend all their vacation time in Traverse City. Instead, they can stay at similar resorts around the country and around the world.
At The Homestead in Leelanau county, fractional sales are up 100 percent since 2010. The resort, which sells quarter, eighth, and twelfth shares, has offered this type of ownership for more than two decades. Buyers can choose from building sites, detached single family homes, or condos on 350 acres of lake or river frontage.
"The Homestead continues very strong communication with our current and previous guests," says Diane Kemp, resort realty manager. "In our experience, most of our owners were previous guests before purchasing."
Almost at full capacity, The Homestead has sold 95 percent of its units. Only 14 residences are currently available, not including re-sales.
Kemp says another reason for success in sales is the resort's increased internet marketing efforts. Potential buyers can view detailed descriptions of units, take a virtual photo tour, and get instant pricing.
LeBear Luxury Residential Club and Spa
Lakefront residences in Glen Arbor are also in high demand right now. Lisa Schmidt with Coldwell Banker Schmidt says she sold 13 shared occupancy units at the LeBear Luxury Residential Club and Spa over the past year.
"There's definitely a buzz going on about fractional ownership," she says.
Schmidt, who holds four open houses a week at LeBear, says several times this summer the resort was near capacity and she'd have to rent a room herself, just to make sure one was available to show customers.
She goes on to add the majority of buyers are from Ohio, Chicago and Detroit, and that all of her recent sales at LeBear have been in cash.
At Crystal Mountain in Benzie County, sales are also climbing. At The Bungalows at Crystal Glen, for instance, only three shares are still available.
"We've sold almost three times as many fractional shares as a year ago, which is exciting and encouraging," says Jay White, vice president of sales.
He adds over the past five years, about 38 percent of the resort's reality purchases were of fractional ownership properties.
"The majority of our customers are investing in a lifestyle as much as they are a property."
According to White, the resort has lowered prices, and financing rates are low, putting Crystal Mountain on pace to have one of its best summers ever.
Along with a boom in business, all four properties also share a similar philosophy when it comes to sales approach.
"Some people associate time share or fractional ownership with high-pressure selling," says White. "That couldn't be further from our approach."
Sales consultant Goetschius agrees with this low-pressure practice. He adds today's consumers are "savvy, skeptical, and sophisticated," and won't put up with low-end sales tactics and gimmicks. BN