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If You Can’t Afford Your Dream Vacation Home, Why Not Share It?

By Anastacia Mott Austin

As gas prices soar and the housing market continues to tank, at home in the States and abroad, people are scaling back the scope of their vacations, leisure investments, and travel plans. But that doesn’t mean you have to give up all of your dreams. In fact, a new trend has been gaining in popularity that allows for a taste of that vacation dream home, without crippling your vacation budget.

Folks who would be overwhelmed at the sticker price of buying a vacation home by themselves are increasingly turning to the trend of sharing their dreams, or buying a vacation home with a tenants-in-common deed or fractional ownership agreement.

But I don’t want a timeshare, you say. Timeshares can be a great idea for some people, if they know for sure they’ll want to vacation at the same time every year. But timeshares aren’t really the same as owning that log cabin by the lake and being able to leave your inner tube in the storage closet. And timeshares don’t really belong to those who’ve bought in; you’re only leasing the right to occupy the place for a short period of time every year, and while you can sell that right, the property never belongs to you.

Families or groups of like-minded friends are deciding to go one step beyond the timeshare, and actually own a vacation home together. There are several ways to go about this. Travel agencies and real estate planners are catching on to the trend, and are responding to the desire for shared home ownership. A number of people can buy a property as tenants-in-common, and decide for themselves how to divide up the months of the year for vacationing.

And while this type of arrangement has typically been used in the case of expensive luxury homes, when one person alone cannot afford the scale of such a home by themselves, joint ownership has increasingly been used for all kinds of vacation homes, from the super-luxe to that rustic log cabin in the woods.

Another option for buyers is fractional ownership, which is used more often when the tenants either don’t know each other or wish to not be burdened by sharing the same deed with someone else.

A tenants-in-common agreement involves two or more people sharing the deed to a home. Each person would need to work with the other owners in arranging credit scores and obtaining a loan, and would need to agree on all plans to sell or buy other owners out. A fractional ownership agreement is set up in such a way that, while the owners still share the home equally, they each have their own individual deed, and don’t need to rely on the other co-owners when deciding to sell or change the terms of their mortgage.

While the tenants-in-common agreement has been more common until recently, more and more buyers want to opt for a fractional ownership agreement, and it’s getting easier to secure financing and find homes where such an arrangement is possible.

There are pros and cons to each arrangement. Tenants-in-common can be dicey if you’re not sure of who you’re buying in with. If your co-owner loses his or her job, falls behind on payments, or decides to move to Alaska, you’re in a pickle.

With a fractional ownership agreement, you wouldn’t have to worry about the other owners’ finances or credit scores. That gives a sense of security and many people choose this option. However, with fractional ownership there is no guarantee that your co-owners won’t decide to sell their piece to someone you don’t know or like.

With both types of arrangements, it’s important to have house rules that are agreed upon by everyone, including what can be stored at the house, how to decorate, and rules for cleaning up upon leaving. It’s not the same as owning your own vacation cabin by yourself, but the benefits may outweigh the possible downsides for many folks.

So if you’ve decided that your dream cabin is just not in the cards right now, don’t give up just yet. Find some like-minded family members or friends (or even strangers), and start talking about owning that vacation spot together.

That way everyone can have a little slice of the dream.

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