What do I actually own when purchasing an Island Fractional Homes private luxury residence?

Fractional real estate ownership is very much like ownership of your principle home. As a fractional home owner, you will enjoy the peace of mind that comes with having a deeded interest in your luxury vacation home. In “legal-speak,” you have a fee-simple, undivided fractional interest as a tenant in common with each of the other fractional homeowners. Simply stated, owning a deeded interest in a Kauai, Hawaii, private fractional home entitles you to all the benefits and rights that come with normal home ownership.

How much time do I own in each year?

Due to Hawaii fractional laws and because many Kauai vacation home owners can only travel over for one extended stay per year, we have designed a fractional ownership plan perfectly suited for the Hawaiian Islands. Fractional home owners will select a defined and fixed sixty-day time period (consecutive days), designed for your maximum enjoyment and use. We appreciate that Kauai vacation home owners like to plan their visits well in advance, and our plan makes this a reality—year after year.

Can I buy more than one fractional ownership interest?

Yes, you can purchase more than one sixty-day fractional home ownership interest. Ask us for details regarding Island Fractional Homes’ discount for multiple interval ownership.

Can I buy one fractional ownership interest with someone else?

Yes, you can purchase a single fractional home ownership interest with more than one party, thus further reducing both your up-front purchase cost and annual fractional home ownership costs. Although a single fractional interest cannot be legally divided into less than the defined sixty-day interval, multiple parties can share their sixty days together. The By-Laws provide additional guidance with respect to the voting rights of fractional ownership, specifically where more than one family owns a single fractional ownership interest. Ask us for more information.

Who will manage and maintain the property, and who will pay all the bills?

Island Fractional Homes has entered into an exclusive agreement with one of Kauai’s most trusted property management and luxury vacation rental companies to provide conscientious, professional management of your luxury vacation home in Hawaii. With our partner’s wealth of local knowledge and experience, we believe that our family of fractional home owners will be very well served.

May I rent out any of my designated weeks?

Yes. One of the additional benefits of fractional home ownership in Kauai, Hawaii, with Island Fractional Homes is the ability to vacation rent your unused weeks. You may place any unused portion of your sixty-day interval in a professionally managed luxury vacation rental program. We are fortunate that our property management and maintenance partner is also one of the most popular and exclusive Kauai vacation home rental companies. While we cannot make any guarantees about potential vacation home rental occupancy or income, we do know that our current property offerings at the Villas of Kamali’i are prime vacation rentals thanks to their generous size, stellar location, and luxury furnishings and appointments. Ask us for more details.

Can I exchange weeks with another Island Fractional Homes’ owner or with other luxury homes in other locations?

Yes, you can exchange time with our other owners—this is not uncommon. We have also created an alliance with Luxury Lodging and Exchange’s network of luxury homes on the mainland. Ask our Sales Representative to tell you more about the current homes available for exchange. In addition, there are numerous avenues to create other exchange opportunities around the world.

Who are the other fractional home owners with whom I will share home ownership?

You will own your luxury fractional vacation home in partnership with other like-minded people who want to own a luxury Kauai, Hawaii, second home and who recognize the value and benefits of fractional home ownership. Demographic research into high-end fractional home owners yields very few surprises: most fractional home owners are well-educated, professional people with strong annual incomes and net worth. They understand that owning a second home with other independent owners requires a small degree of communication together during the year, including participation in the annual fractional owner’s meeting. This important meeting will be facilitated initially by the developer and subsequently by the property management company.

How do I sell my fractional ownership interest should I choose or need to in the future?

Because you have an undivided, deeded interest in your property, you can sell your fractional ownership interest just as you would any other residential or vacation home. This includes selecting a qualified real estate agent, getting your property listed in the MLS, and employing any and all other avenues to assist you in selling your fractional ownership interest.

How much does a fractional home ownership interest cost?

Starting at $250,000, you and your family can own a one-sixth (consecutive sixty days each year) fee-simple, undivided deeded interest during the period of the year that you select. Our price per square foot for our luxury homes in Hawaii are well below the national average for comparable properties in highly desirable resort destinations.

Is fractional financing available?

Yes. Island Fractional Homes is excited to announce that we have arranged for fractional ownership financing for qualified borrowers through Hawaii’s leading fractional lender, TransPacific Mortgage. Our lender knows the fractional market and how to get your loan approved quickly and efficiently. They have personally visited our Princeville, Hawaii, property and are pleased to offer you competitive rates for your Kauai fractional vacation home purchase. Ask us for more details.

As an alternative to securing a first trust deed against their fractional interest, many fractional buyers have elected to pay cash, use their home equity line of credit, or reallocate a portion of their portfolio to increase their exposure to the Kauai luxury real estate market. There are many ways to finance your investment, and we are happy to discuss these options with you.

How much are the annual costs of fractional ownership?

Our annual fractional home ownership costs are far lower than anything you will have seen for any comparable property in Hawaii, and include all the operating costs and owner services you would expect (property taxes, insurance, utilities, maintenance, cleaning, property management fees, reserve fund, etc.). There are NO hidden costs. We have developed an innovative approach to keeping annual fractional owners’ costs much lower than you might expect for a luxury Kauai fractional home. We look forward to sharing these details with you.

How are each owner’s rights and interests protected?

With the assistance of very experienced legal counsel, Island Fractional Homes has taken considerable care to protect each owner’s rights, as well as the value of the property itself. A comprehensive set of governing documents has been developed, which each owner reviews while in escrow. This set of legal agreements is designed to provide unambiguous guidance for the operations of the fractional vacation home, and includes the Fractional Declaration, Fractional By-Laws, Fractional Owners Association documents, House Rules, Property Management Agreement, Annual Operating Budget, Declaration of Covenants, Conditions, and Restrictions (CC&Rs) for the association in which the property is located, all disclosures, and an array of additional documents for your review. In addition, full property and liability insurance is in force.

What happens if there is damage to the home?

First of all, the property management company will ensure that any damages are repaired in a prompt manner by qualified local professionals, so that there is no interruption to the enjoyment or use of the property. The owner within whose sixty-day interval the damage occurs is fully responsible for all charges. If damages were caused by a vacation renter, it is that interval owner’s responsibility (or the vacation rental manager’s, if applicable) to collect for all damages. The other home owners are not responsible for any portion of the damages whatsoever.

What about smoking and pets?

The House Rules, as currently written, do not allow for either smoking or pets of any kind. All six fractional home owners would need to agree to change these rules; otherwise, they will remain in force.

Does this property qualify as a 1031 exchange property?

Depending on the nature of your ownership, you may be able to involve your purchase of this fractional property in a 1031 exchange. As the tax laws governing 1031 exchanges are both complex and strict, you are encouraged to discuss your specific situation and goals for ownership with your tax adviser.

How is this different from a timeshare?

Luxury fractional real estate, such as the properties offered by Island Fractional Homes, differs enormously from timeshares. Whereas timeshares offer benefits to those who are interested in vacationing one to two weeks a year and don’t mind competing for space at their preferred destination, luxury fractional home ownership offers some very important differences:

• A deeded interest in your luxury vacation home, with rights and benefits consistent with any other real estate purchase;
• Generally, three or more bedrooms and more square footage;
• A significantly higher level of luxury furnishings, services, and amenities;
• The security of knowing that you can return year after year to your own private residence, in Hawaii;
• A much greater chance of long-term appreciation in your real estate investment as compared to timeshares, which have historically lost value after the initial purchase;
• A greater number of weeks spent at your private luxury vacation home
• Also, all important decisions are made by you, the fractional owners of your property, not by a corporation, developer, or property management company.
• Affordable, fully disclosed annual ownership costs
• And lastly, you have true pride of ownership.