Muskoka Resort Club Issues Guide to Purchasing Fractional Vacation Homes in Mixed Use Properties

The Muskokan Resort Club (http://www.muskokanclub.com), a Muskoka fractional ownership mixed use resort development of luxury villas on prestigious Lake Joseph, have issued a guide to help potential purchasers, to make them aware of the complexities and the issues involved when investing in a vacation home that is part of a mixed use development.

"There are some key questions and research that should be done when considering investing in a fractional vacation home located in a mixed use development," states Walter Prychidny. Walter Prychidny is President of Resorts Muskoka Ltd., the developer of the Muskokan Resort Club. Resorts Muskoka also owns and operates resort properties as well as acts as exclusive consultant for other high end fractional developments.

"Apart from satisfying yourself with respect to the location, the price point and quality of the fractional vacation home, you should be aware that the other businesses that form part of the development, typically hotels and restaurants, will definitely have an impact on the value of your fractional home as well as your enjoyment. In fact, the value of your fractional vacation home investment will be directly linked to the success and quality of these businesses. There are a number of things you should consider," says Prychidny.

Hotel and restaurant operations as part of mixed use fractional development:
Like it or not you are a "partner" with the hotel /restaurant owner
Get to know the developer/owner.
Who is the hotel/restaurant owner? What is his experience? Is the owner well funded?
Is it a long term investment for the owner?
Are your interests aligned with the Hotel?
Do they intend to time share or fractionalize the hotel component?

What is the hotel annual occupancy of the area?
Determine the annual occupancy of hotels in the area. As a general rule, if hotel occupancy is less than 60% in highly seasonal locations- the hotel may not be producing the type of the returns to justify the investment. Potential fractional owners should be wary of these situations as the hotel/restaurant may be incurring operating losses.

What is the brand of the hotel or restaurant and its affect on value?
Does the brand of hotel/restaurant reflect the price/value you are paying for your fractional?
If the brand is changed (downgraded) how would this affect your investment?
Do the fractional owners have a voice in approving any brand change?

Consider where the hotel or restaurant is physically located on the site.
Are there security issues re transient hotel/restaurant guests?
What are the hours of operation of the restaurants?
Will there be noise issues if hotel caters to conventions or other group issues?
Are parking areas shared?
Is the hotel a focal point of the development? "As the hotel goes -so goes your fractional investment?"
Can your investment stand alone apart from the hotel?

Do you share common areas with hotel? If so how are maintenance fees calculated and shared with your fractional?
This is a key factor. As a general observation, maintenance fees are higher for fractional vacation homes which form part of a hotel complex.
Questions to ask:
a.Who owns the common areas?
b.Do you share in any common area costs /driveways /parking /lighting/security/landscaping? If so how are the costs allocated?
c.How are your common areas charges or maintenance fees allocated?
i.Square footage is generally used to share costs
ii.However the actual volume of space that is being heated or cooled is never taken into account.
iii.Hotel main floors can have ceiling heights in excess of 20 feet, including check in area, convention meeting spaces/ corridors break out areas and restaurants. It costs much more to heat and cool those spaces than your 9 foot condo ceiling height. Electricity- Hotel related areas remain lit on a 24 hour basis -ensure the hotel pays its fair share.
iv.Are there separate meters for utilities? This would solve the allocation issue for these costs.
v.Maintenance and security costs how are they allocated? These are higher due to the hotel operations.
vi.Landscaping/extra lighting expenses
vii.How are major repair items assessed- roof repairs/parking/underground parking/HVAC systems if they are tied together
viii.Reserve fund: are common expenses included? Are they higher due to increased wear and tear caused by hotel operations?

Are you part of rental pool?
a.Is it mandatory participation?
b.Can you opt out?
c.Are their use restrictions for owners? Are you satisfied with the restrictions? Does it match your vacation pattern?
d.How is the rental income split? Pooling all units- or is it specific units- If you purchase the best unit and it is always rented but the income is shared with all owners- does the investment make sense- better off buying a lower unit and share in the same income
e.How are management fees calculated, as percentage of gross revenues or a percentage of profit?
f.Who absorbs any operating losses of the hotel operations?

Other issues if a restaurant is a stand alone amenity of the fractional project:
In situations where there is a stand alone restaurant on site and although it may appear to be convenient to have a restaurant on site you should also consider (as well as the above) the following:
a.Does a restaurant on site make sense? If your fractional has fully equipped kitchens is a restaurant on site necessary? How often will the owners use it? Is it dependent on the use by fractional owners? Are there other restaurants close by?
b.If your fractional is located in Cottage country, the BBQ, casual outdoor dining is part of the cottage "experience" with family and friends. Therefore restaurants on site are used less frequently and not necessary especially if other restaurants are located nearby.

Contact Information:
Walter Prychidny
The Muskokan Resort Club
3876 Hwy 118 West
Port Carling, ON P0B 1J0
1-866-960-9016
416-960-9016
info@muskokanclub.com
http://www.muskokanclub.com

Article Source: TravelFreeGuides.com

About the Author

About The Muskokan Resort Club: The Muskokan on Lake Joseph, offers affordable and carefree Muskoka vacation living where club owners purchase a 1/10 share of a luxury Muskoka cottage to enjoy for five weeks every year. With magnificent lakeside villas and extensive resort recreational amenities on 42 scenic acres, the Muskokan Resort Club is Muskoka's premier fractional ownership resort club. To enjoy affordable boat ownership during their resort stay, Muskokan Resort club members may join the Muskokan Boat Club. To learn more about The Muskokan Resort Club and the advantages of owning a luxuriously appointed, lakeside vacation villa with private spa pool, call toll-free 1-866-960-9016 or visit the website (http://www.muskokanclub.com).

by: rin-emedia

Total views: 0 Word Count: 1062 Date: Sun, 21 Aug 2011 Time: 7:24 PM - 0 comments

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