Fractional Ownership, also known as Tenant-in-Common (TIC) is a form of ownership of real estate. Under this co-ownership structure, individuals will have an undivided fractional interest in an entire property and will share their share of the net income, tax benefits, and appreciation. Additionally, they will receive a separate deed and title insurance for their percentage ownership interest and will have the same rights as a single owner.
Fractional ownership is not a new concept. In fact, it has been successfully applied to various industries, including yachts, aircraft, resort condominiums, and luxury real estate for second homes. The resort industry is entering a period of explosive growth, and luxury fractionalized resort products are becoming a more important and recognized component of this industry. According to Omni Brokerage, Inc, real estate investments in ICT exceeded $4 billion in 2005. Additionally, it has become the investment vehicle of choice for real estate investors who want to defer capital gains through a 1031 exchange and own real estate without the headaches of management.
Fractional ownership typically ranges from 1/4 to 1/13 shares. The wealth of the location and the length of the season determine the size of the stake. Most of the recently completed fractionals are located in the ski areas of the Rocky Mountains, but the concept is rapidly spreading to other popular domestic resort destinations in the United States, the Caribbean and Mexico and other international vacation spots. Fractional ownership stock prices vary widely and can be influenced by various market factors, including unit size, number of owners, location, amenities, and available supply. Typical share prices range from $100,000 to $500,000, but can easily exceed $1.0 million for high-end Private Residence Clubs (PRCs).
Fractional Ranch Ownership
Ranch Partners, LLC is bringing the concept of fractional ownership to the ranch real estate industry. We have found that the price and responsibility of full ranch ownership exceeds the desires and expectations of most of our clients. By packaging the ranches into fractional ownership, we are able to serve a significantly larger group of investors and provide a luxury resort experience, while continuing to preserve the ranching heritage of the west. All owners will have access to the ranch for 4 seasons, 8 to 12 weeks of luxury accommodations and unlimited use of the ranch’s recreational facilities and services.
While all fractional ranches have access to outstanding recreational activities such as hunting, fishing, hiking, and horseback riding, individual ranch properties can be developed to suit a variety of ownership lifestyles. Some ranch-like properties may suit the owner of a luxury resort, with high-end accommodations, full-service management, and a host of amenities similar to private residence clubs. Other fractional programs can be designed around ranch operations. These programs give the owner the opportunity to live and play on a working ranch. Accommodations are much more conservative, the lifestyle is more rural, and activities are related to ranch operations, including horses, cattle, farming, and ranching.
