This post is an add on to the previous post, The Introduction of Hawaii Fractional Ownership.  This outlines the Basics of Fractional ownership.  This comes directly from Old Republic Title & Escrow of Hawaii.  Here are the basics…

Continue reading The Basics of Hawaii Fractional Ownership »

Since being introduced to this about a week ago, my mind has been racing with thoughts and questions.  What is this exactly? Why do real estate this way? Will there be a demand for it? Will there be a resale market when selling? How do you come to agreements on maintenance and changes to appearance to your purchase when you probably won’t know the other fractional owners (ex. who chooses furniture, wall color, replacement from wear-and-tear), how will neighbors receive these developments, What are financing options (are they similar to condo-tel financing options), What if one fractional owner defaults on their loan, how will it effect the others or the title of the property, or will it, how will the increase in the fractional inventory (reduction in traditional (wholly-owned) real estate inventory) effect the traditional real estate market and inventory and if they become very popular will it adversely effect the affordability of traditional residential properties, and would the city or state look restrict the number of fractionals allowed or come up with mandatory standards to protect consumers?  These are all questions that, come July 12th when I go to another class regarding Hawaii fractional ownership, I hope to be able to answer better.  Right now, I am ignorant to the concept except for the basic concept of how it works.  Anyone that knows me, though, knows that when it comes to real estate in Hawaii, I like to be as educated as possible and am open to new ideas and practices, so long as it does not harm the consumer or mislead the consumer.  So….I will try and give a couple of introductory points to all this. 

As Shermin Potvin  , founder of the Luxury Fractional Guide, said as a comment in another post, “It is apparent Scott that you have not yet done your homework regarding the fractional industry. I would suggest that all r/e agents get familiar with this concept as it will be the way most folks vacation in a few years!”

Maybe most folks will and maybe they won’t, but yes, I haven’t done my homework, and Shermin has put together a good site for fractional ownership.  I don’t endorse it, nor do I guarantee it’s accuracy, but definitely check it out to form your own opinions. He will have more answers than I will.

What I would like to do is understand fractional ownership in as much detail as possible in relationship to Hawaii real estate (each state has it’s own rules and regs for how fractionals are set up and handled), be able to relay to you the pros and cons and what to look out for, so you can make the most informed decision possible.   The introductory material is from Old Republic Title & Escrow, word for word.  Feel free to contact Julie Tumbaga  ( jtumbaga@orexco1031.com ) for more information on fractionals in Hawaii.

Introduction:
Fractionals have transformed the vacation ownership industry over recent years and are emerging as preferred alternatives to wholly-owned vacation homes.  Fractionals attract consumers who can afford luxurious vacation homes but can’t justify the cost and inconvenience of whole ownership when their use of the property is usually limited to only several weeks per year.  Consumers are also drawn to the extensive amenities, five-star hotel-like services, high quality furnishings, desirable locations, exclusivity, and maintenance-free lifestyle offered by fractional projects.

While Fractionals offer vacation home benefits at a fraction of the cost of owning an entire vacation home, the decision to purchase a fractional is significant.  Fractional prices range from under $50,000 to several million dollars, depending upon the “size” of the fractional and the related accommodations, the location of the resort, and the degree of luxury provided.  Consequently, your purchase of a fractional could prove to be a costly mistake unless you have sufficient information regarding a particular fractional project and ask the right questions of developers, salespersons, and yourself.  This brief guide provides you with some of the basic information that you will need in order to avoid the most common pitfalls and turn your purchase of a fractional into a successful, cost-effective, and worry free venture.

Basics to follow…

Old Republic Title & Escrow of Hawaiiis helping pave the way for better understanding of “fractionals” for consumers and Realtors in Hawaii.  This is definitely new to me and almost every Realtor on the island, so we must become educated to help assist you and protect you.  I already see how this could go incredibly wrong if not handled properly, so as I learn more, I will share it with you.  To start, I have added Old Republics Basics 5’s for Fractional Ownership.  I will go further into detail regarding “fractionals” as I learn more.

What?
Fractonal ownership is a percentage of ownership in real property.  This can range from a 1/2 share to a 1/17 share.  Every state has different rules and regulations on the minimum size of the fraction.  The size of the fraction a person owns corresponds to the amount of time he/she is entitled to use the property.  For example, if a 1/2 share is purchased, the buyer is entitled to use the property 26 weeks a year.  If a 1/17 share is purchased, the buyer is entitled to use the property 3 weeks a year.

Who?
2nd home, 3rd home, 4th home buyers are purchasing Fractionals.  CEO’s, CFO’s, COO’s…VIP’s.  Fractionals are the modern version of the 2nd Home.

When?
People have been purchasing real property in the fractional style for hundreds of years.  Only recently have we been able to legally separate the shares of ownership so as to protect the rights of all owners.  Along with this separation comes the ability to mortgage individual fractional shares.

Where?
Resort destinations all over the world. Fractionals are commonly located in popular vacation destinations such as mountain, beach, golf, or urban resorts.  Locations typically include direct access to a lifestyle attraction such as ski resorts, oceans, golf courses or major cities.

Why?
A fractional will allow the buyer to share in the joys and burdens of home ownership.  Value- The average use of a second home is 6-8 weeks.  the second home buyer wants to be in the location, but can not necessarily justify spending the money for a whole unit that he/she will only be using for a couple of months a year.  Owning a fractional share allows the buyer to pay for the time he/she will actually use.
Relaxation- No maintenance required.  Fractional owners avoid maintenance hassles and concerns typically associated with second homes.  All of the daily, weekly, monthly and yearly maintenance, as well as repairs, are performed by a third party.  The fractional owner need only to relax and enjoy their second home,
Quality- Fractional owners enjoy premium quality design, furnishings, and equipment…not to mention a prime resort location.
Service- Fractional owners enjoy services and amenities not usually available to second home owners. 24-hour concierge, daily maid service, and pre-arrival provisioning are a few of the added benefits to owning a luxury fractional home.

The North Shore of Oahu has been discussing the proposed development of the Turtle Bay/Kawela Bay area for the last few years.  Many local protesters don’t want the development, that was essentially agreed to over 20 years ago.  The traffic on the North Shore, esp. during the winter time when surf gets to epic proportions, comes to a stand still as onlookers creep along the highway in awe of the waves.  There is no alternative route, though one has been in discussion for sometime. 

Today, however, North Shore residents can be pleased about one land acquisition, as 1,129 acres of land in Pupukea have been purchased by The Trust for Public Land.  The land, that was at one time planned for an extensive development, will now be set aside as preservation land. The purchase ends a decades-long effort to protect the property, which overlooks many of the North Shore’s famous surfing spots, from development.  This was definitely a collaboration by many groups and organizations, and will help protect a small piece of the North Shore.

Year-on-year overall visitor arrivals were up 1.6 percent last month to 586,338, setting a new record for May. Last month’s visitors spent an average of $179 per person per day, $1 more than last year, and visitor days rose 2.7 percent.

Arrivals from the U.S. West were up 3.5 percent, U.S. East 6.8 percent and Canada 8.4 percent. But Japanese tourism continued to fall off with arrivals dropping 10.3 percent.

Hawaii hospitality industry was at  76 percent hotel occupancy for the seven days to June 23. That was well down from 86.3 percent in the same week a year ago, but room rates made up for it with an 11.7 percent year-to-year jump statewide,

Testing, testing.  The one year test-run of the ferry from Leeward coast into Honolulu will begin Sept. 4th.  The cost to ride the ferry…..$2, the same as it costs to ride the bus.  Not bad!

Success of the city’s ferry service beyond the one-year demonstration period will likely depend on how many people ride, Mayor Mufi Hannemann said.

The project is already a year behind schedule. The city originally wanted to begin service last summer, but received no bidders for the contract.

City buses will shuttle passengers between Waianae Transit Center, Kapolei and Makakilo and the ferry pier in West Oahu. City buses will also transport passengers between the Aloha Tower pier downtown and the University of Hawaii and Waikiki via Ala Moana Center.

Talk about a winning situation.  Why not take an hour ferry ride, where you can relax, to town for work, rather than sit in traffic for an hour or more.  Sitting in traffic drives me nuts, I would definitely welcome the change if I lived in Ewa, Kapolai, Makakilo, or the Leeward Coast.  Any thoughts?

She is finally here..almost.  The long awaited and much debated superferry is set to arrive on Saturday the 30th and will no doubt be a sight to see.  The Superferry will make a grand entrance by coming around Koko Head, around Diamond Head and in front of Waikiki before the $85 million vessel lands at Aloha Tower. Reservations also begin tomorrow.

For the three-hour Maui and Kauai trips, that fare structure will be $52 for adults for travel on Tuesday through Thursday and $62 for Friday through Monday. Fourteen-day online advance purchases will be $44 and $54, respectively, and children ages 2 through 12, seniors 62 and over, and retired military will be $41 and $51. Children under two will be $17 regardless of day. Transporting a car or SUV one way will be $59 on off-peak days and $69 on peak days. Fares for Big Island trips, which will take four hours and 15 minutes, will be $10 more when a second vessel begins service there in early 2009.

I have been holding on to my truck for a while for the very reason of being able to take my truck and my surfboards to the Big Island for visits.  I can’t rent a truck on the Big Island with the off road package I have that allows me to get to a lot of the Big Island surf spots .  The rental car companies don’t allow you to go off road with their vehicles anyway, so this gives me an opportunity to take my own car interisland and take my boards with me.  I am looking forward to this option and the option to be able to see the islands from a different perspective as the Superferry passes by the islands on it’s way to the Big I.

 ”Terry O’Halloran, director of business development for the Superferry, said the “experience” of traveling on the ferry will come in several forms. Among those, he said, are three different food and beverage areas; newly released movies on flat-screen TVs; a keiki play area next to tables and leather sofas where the parents provide supervision; a Surf Break lanai that will show sporting events; and a Hahalua lounge that will offer a higher level of service, including beer and wine, and be available for a $20 upgrade. There also will be a place for people to plug in their computer and work.”

From the Honolulu Advertiser: “Ko Olina seeks to tap 6.5 million gallons of seawater a day, though the future ultimate demand is projected to be 11.6 million gallons a day.  The largest projected use of the cold seawater would be to chill water in the air-conditioning systems of four envisioned condominium time-share and hotel buildings.  Using cold seawater to cool buildings promises to cut air-conditioning costs while reducing crude oil consumption and energy demands by using an abundant, reusable resource in Hawai’i.  Seawater air conditioning is a proven technology, which is viewed as having wide application in Hawai’i but to date has been limited to relatively small-scale projects, including one at the Natural Energy Laboratory of Hawai’i Authority on the Big Island.”

Stocks finished flat Thursday after the Federal Reserve offered a cautious reading on inflation but said the economy appeared to be growing at a “moderate” pace.  In other words, the Fed isn’t as concerned about inflation now, as it was a few months ago as inflation fell within “reasonably acceptable levels”.  The fed will continue to keep an eye on inflation,as it’s stance is neither to raise rates nor lower them.  Keep rates where they are and keep an eye on inflation.

When I moved to Hawaii in 1999 I was used to eating southern fried food and occasionally Greek food at a Greek friends house growing up.  That was the extent of my culinary experience.  I had no clue what an Aioli or a beurre blanc was. 

The culinary experiences I have had in Hawaii are part of the reason I enjoy living in Hawaii.  Never have I been to a place with such a diversity of ethnic foods.  Being out in the middle of the Pacific at a midway point between the US mainland and Asia has allowed for a large melting pot of different cultures and races, and with a population that lacks an ethnic majority, there is plenty to experience.  It has really opened my eyes up to different ways of preparing dishes, and new of living, which also spills over to trying new experiences in life. 

My motto with food is, “If you don’t try it, you can’t say you don’t like it.”  I will try something once, and if I don’t like it then I won’t eat it again, but how can I say I don’t like it unless I try it.

My palette for food has changed drastically since moving here.  In fact, I don’t eat most of the foods I used to eat. I certainly can’t eat rice like I used to (butter, salt and pepper, blah).  If it doesn’t have Shoyu, I don’t eat it, and I can taste the difference between Kikkoman and Aloha Shoyu.  Before moving out, I thought Kikkoman was the only “Soy Sauce” that existed.  Anyway…where am I going with all this?

The “Flavors Of Honolulu”event will be going on June 29th-31st next to Honolulu Hale at the Frank Fasi Civic Center Grounds. Not only is it a great way to taste food from the different restaurants of Oahu, but it helps support Abilities Unlimited, a non-profit organization that helps individuals with disabilities. Hawaii is truly a culinary epic-center, so get out and experience some of the great food Oahu has to offer.

“The City and County of Honolulu is proud to continue this great tradition of supporting individuals with disabilities while bringing the community together to enjoy the best of multicultural food and entertainment,” says Mayor Mufi Hannemann in a released statement.

Participating restaurants will include Bali By The Sea, Ciao Mein, The Colony, Da Spot Health Foods & Juices, Dave & Busters, Down to Earth, Big Wave of Flavors Tomato Bar, Golden Dragon, Gordon Biersch Brewery Restaurant, Greek Marina, Hong Kong Harbor View Restaurant, Ichiriki, Lily Koi Restaurant & Lounge, The Mandalay, Musashi, The O Lounge, Seoul Jung at the Waikiki Resort Hotel, Shanghai Bistro, 3-Star Gourmet Restaurant & Catering, Tony Roma’s, Top of Waikiki, Tudo de Bom, and Village Steak and Seafood.