Davids’ Big Island Mauna Lani Real Estate

March 15, 2008

Fractional(e) Rationale

Filed under: Updates — David C. Swanson @ 12:02 pm

I want to thank Mike and Rick for giving me the rationale for writing this post. Their comments bring up some interesting points. Fractional ownership is a shared ownership situation that is delineated by a time period or season of the year. A typical fractional ownership would be for a two month block of time. The price is determined by the time of year. For instance, the Christmas season anywhere or ski season in Vail would command a premium price.

I’ll start by answering Mike’s question. No, at this time, there is nothing in the resort documents that prevents fractional ownership. Time-share – fractional’s kissin’ cousin – is, however, forbidden. Vacation clubs are also permitted in the resort but individual communities within the resort are free to permit or forbid their presence and they have. More on this later.

Rick is correct to bring up the Advantage Program because it is pertinent when discussing fractional ownership. First of all, Advantage Program participation is limited to owners that have at least a one third interest in a property. So, three equal owners of a property could all participate in the Advantage Program. You must produce a deed to prove your percentage of ownership and thus qualify for participation in the program. Now, here is where it gets tricky. Each of the three “owners” above could be a partnership – partnerships, businesses, trusts and individuals can all be owners – and each qualified ownership interest can have five individuals participating in the Advantage Program. It is therefore conceivable that as many as 15 people could qualify for participation in the program from ownership interest in one property. Please note that this precludes members in a vacation club because the ownership isn’t structured that way.

I’m pretty sure that Mauna Lani Resort does not limit the number of owners for a property. For instance, twelve entities could be on a deed with one entity having a one third interest and the other eleven having each having approximately a six percent interest. All would be owners but only one could participate (five individuals max) in the Advantage Program. This is probably a big deal to a fractional owner. As I understand it, unlike the usual multiple ownership where all parties and their percentages of interest appear on one deed, fractional ownership involves multiple deeds. Each of these deeds is transferrable so one fractional owner can sell his interest without consultation with or permission of the other owners. So let’s pretend that we have a situation where six families have each purchased a two month interest in a property. Each family would have a one sixth interest and none would qualify for the Advantage Program. Please note that, in this example, even if all of the owners were on one deed none of them would be able to participate because none would have the required one third interest. Now, suppose that two of the families, each with two children, decide to combine their ownership in a way that would give them a one third interest and thus qualify them for participation in the program, three of the family members would be left out because only five persons from each ownership entity can participate.

I have some other thoughts on fractional ownership but those will have to wait for another day. I’ll close by encouraging you to consult the Advantage Program administrators before structuring your ownership. Then, go out and enjoy this fabulous resort!

Robert D. “Bob” Hudspeth R(S)
Coldwell Banker Maryl Realty at The Shops at Mauna Lani
(808) 989-1958 Cell

March 13, 2008

Mauna Lani Resort – Expert or Fan?

Filed under: Updates — David C. Swanson @ 2:15 pm

I was chosen to write this blog on Mauna Lani Resort and immediately became an expert – I mean, surely they wouldn’t let anyone but an expert write about the resort, right? Well, I’m a little uncomfortable with that perception. I’d be surprised if you could find a true expert on Mauna Lani – there is just too much to keep track of. Let me see, there are two resort hotels, two golf courses, seventeen residential living options – including condos and single family homes, the Advantage Program, the Beach Club, the Spa, The Shops…..you get the idea – there’s a lot of stuff! I’ll be exploring the resort in the months to come and I’ll attempt to give you a feel for what it’s like but I must warn you that the information won’t be objective. It can’t be because I’m not objective, I’m biased. I admit it, I’m a blatant and unapologetic fan of Mauna Lani!

Since I brought up the fact that I am biased, let me start off by addressing one of my pet peeves. It is the media reporting on the current real estate market. It is, for the most part, misleading. Right now our market is pretty bland. Properties are selling, the bottom is not dropping out of the market despite what you might read in the headlines. A recent newspaper article, reporting on market performance for the Big Island as a whole, indicated that the median price for homes went up in 2007. I promise you that, if you had read all of the real estate articles in the same paper for all of 2007, you’d be asking yourself “How can that be?” Most of the reporting has been of the “gloom and doom” variety. Apparently, “gloom and doom” sells papers – accuracy, not so much. What has happened is that the market has slowed, the number of sales is way down pretty much across the board. But a slower market doesn’t mean it is a bad market – it’s just not as energetic.

Some Buyers are showing up, having read all of the newspaper articles and seen all the reports from the “talking heads,” ready to make a killing in Hawaii real estate. Then they find out that there aren’t hordes of Sellers desperate to give away their properties. When they figure that out they’re not quite sure what to do. What they need to do is find the best “value” instead of looking for the best “deal.” There are a lot of “value” posibilities in this market and a good real estate agent will be happy to help you find them. But the Buyers must act in order to secure the “value.” And everyone needs to remember that greed is the big “deal killer.” Some people feel the “best deal” is the one where they get everything they want and the other party caves in on every issue. It has been said the “best deal” is the one where neither party is completely happy at the conclusion. Actually, I think there is something to be said for the “best deal” being the one that gets done!

As we progress, I’ll get into market trends, property profiles, restaurant reviews, you name it – and, in fact, I wish you would. Please give me your questions and suggestions. I’ll try to answer the questions – my research will make me more of an “expert” – and comment on the things that are important to you.

Robert D. “Bob” Hudspeth R(S)
Coldwell Banker Maryl Realty at The Shops at Mauna Lani
(808) 989-1958 Cellular