Co-owning a vacation property

[Hillbeans]

So i'm at the beach this week (OC NJ) and every time that our family comes to visit DH and I toss around the idea of someday owning a 2nd property down at the shore. The houses are expensive and it got me thinking about co-ownership of a property. I am sure people do it within families but is this something that can be done through a realtor with someone you don't know? Ideally if we owned 1/3 of the property and set up a schedule of occupancy (get 4th of July week every 3rd year, split the summer months, etc) it'd be ideal and we'd jump at the chance. Anyone hear of this or are my rose colored vacation glasses making me irrational?

 

[Hannathy]

Just want to say if you do something like this get EVERYTHING in writing! I have seen several families and friendships destroyed over sharing a property.

 

[The Mystery Machine]

My BIL does this. He coowns with 4 families. They each get their week.

You need to hire a real estate attorney to make it legal and spell out ALL the details, including death, divorce, or unforseen financial bombs. Yes it may be morbid but if your co owners go through divorce, you will have serious issues. Or is someone gets sued, you need to have your home legally covered.

They have a condo and it went through a financial hit with needing repairs and people had to cough up big money for a time. That was a struggle.

 

[Darcy03231]

We have friends that own a vacation home with another couple. They alternate weeks through the year and share in the costs of expenses. So far its worked out for them (15+ years). I will say these people have been friends for over 40 years, they met in kindergarten.

 

[kirstenb1]

I was just talking with another mom at Back to School night. They co-own a beach house in Nags Head with 11 other families. Some of whom they've never met. A realtor introduced the idea, and they have co-owned for 3 yrs. She is thrilled. The weeks rotate every year. Everyone is guaranteed one summer week, no matter what.

 

[surfgirl]

I'd be cautious.

We did it... with our bil. This is in a town where we all go for the weekends... we were actually sharing at the same time. We made a 'no one gets an invitation without all agreeing' rule b/c we didn't want it to be open door for people to think our floor was to crash on. The odd thing was that during times we weren't there, it became odd to always ask them for permission for a friend.

What happens when they loan it to someone and the third party trashes it ? Or there are different cleaning standards ? Or financial circumstances change ? Or there is a death/divorce... even dismemberment ? : )

It is hard. We just unraveled it and even that was difficult. We bought them out... what price do we agree upon ?

My personal opinion would be to do it solo and find something less expensive that is YOURS.

 

[bettymae1121]

If it's a popular tourist area, a better way to go might be to see if you can buy it on your own and use a vacation management company to rent it out for you on the weeks you don't want it. Not sure if the numbers would work or not, but if it did that would be a way to afford it and still have it be "yours".

 

[browneyes106]

My cousin and her husband co-own a small house in Telluride with a man who lives in Wyoming. They have a contract with each other. They have had the house for 10 years. They have an agreement that only each other's relatives can use the home as well. For the past couple of years the co-owner has had some health issues and doesn't use that much so my cousin has used a lot she spent two weeks of Christmas vacation there.

I agree with other make agreements in writing and consult a lawyer.

 

[browneyes106]

My cousin and her husband co-own a small house in Telluride with a man who lives in Wyoming. They have a contract with each other. They have had the house for 10 years. They have an agreement that only each other's relatives can use the home as well. For the past couple of years the co-owner has had some health issues and doesn't use that much so my cousin has used a lot she spent two weeks of Christmas vacation there.

I agree with other make agreements in writing and consult a lawyer.

 

[mookie]

I'd be cautious.

We did it... with our bil. This is in a town where we all go for the weekends... we were actually sharing at the same time. We made a 'no one gets an invitation without all agreeing' rule b/c we didn't want it to be open door for people to think our floor was to crash on. The odd thing was that during times we weren't there, it became odd to always ask them for permission for a friend.

What happens when they loan it to someone and the third party trashes it ? Or there are different cleaning standards ? Or financial circumstances change ? Or there is a death/divorce... even dismemberment ? : )

It is hard. We just unraveled it and even that was difficult. We bought them out... what price do we agree upon ?

My personal opinion would be to do it solo and find something less expensive that is YOURS.

These are some of the reasons we have always hesitated in doing this. I've heard many a horror story on how it can really break up a family or friendship if all parties aren't on the same page, share the same cleanliness, etc....

 

[abdmom]

The concept is called fractional ownership. There are certain homes that are set up from the get go as fractionals. It's especially common in resort areas. I would do a search for fractionals in the area that you are interested in. There is generally a management system in place as well as comprehensive contracts spelling out what your obligations and benefits are for the fraction that you purchase.

 

[mickey&minniealways]

I would think long and hard before doing this. My mother did this with her sister. It worked great for the first 2 years. Then one would be a set of dishes that the other didn't like. Or someone wanted to get a new bedspread for the extra bedroom that someone didn't like. We went on vacations with them all the time. But when the decided to share home ownership it was a problem. The sold it and went back to the other way. We vacation with friends all the time but I wouldn't buy a vacation home with them. We have friends who did this in a skii area with someone. Now the other couple is divorced. The new spouse of one of them doesn't get along with anyone. She wanted to redecorate everything. Our friend finally bought them out. Had to take a second mortgage out to do it. Works double shifts in order to pay it off and also rents the place out occasionaly. So please think it through and when you think you have your answer think it through again.

 

[golfgal]

If you do this set it up as an LLC or some kind of corporation that owns the property not everyone individually. There are some tax benefits to doing this and then decisions made on the property become business decisions, not personal. Get a GOOD real estate attorney involved from day one.

 

[tar heel]

My FIL owns 1/12 of a beach resort condo. Each owner gets 1 week per season each year. They've owned it for about 25 years, and there are no longer 12 owners -- some of the original owners bought extra shares as heirs wanted to get out. It's a somewhat unique situation in that the 12 were all professional partners and also owned other property together. I don't know this for sure but would be shocked if it isn't set up as some kind of corporation.

They contract with a property management company for day-to-day stuff and also access the owners for repairs, redecorating, new bikes, etc. Whoever is in the condo a particular week pays that week's cleaning bill. They don't rent it now, but I think they originally rented unclaimed weeks to family/staff of owners for about 1/2 the going rate.

 

[Hillbeans]

Fractional ownership, yes that's what it's called.

Thanks to everyone for your responses and the positive/negative aspects of doing something like this. DH and I don't mind the idea of renting it out through a Realtor, so we're on the same page with that. I'm thinking we wouldn't do it forever and i'd be ok with that. It's just I can see how these things can become burdensome if not handled properly. We're going to save for the next year, our tax refund and any work bonus, and see where we're at next summer and if we're serious and have $ saved, then we'll know if we're one step closer to owning something down the road.