Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
Owners of units at Larsmont Cottages on Lake Superior near Two Harbors, Minnesota, have access to the full grounds of the resort.
Marilyn and Pat Ryan long dreamed of owning a getaway on Minnesota’s North Shore, a favorite regular destination for decades. But lakeshore property was never economically feasible for the Woodbury, Minnesota, couple, until they discovered a different concept of home buying: fractional ownership.
Now, as shared owners of a unit at Larsmont Cottages, the couple has a home by Lake Superior. For 13 weeks each year, they can stay there, lend it out, rent it out, donate the time to a charity or let it sit idle.
“The thought of shared ownership was very attractive to us,” says Marilyn. “It provided for the quality of accommodation we enjoyed having, without the full price tag. It just made so much sense. Some people say, ‘How can you stand to know there are other people there when you’re not there?’ But if I wanted it all to myself, I would have had to pay four times what I paid.”
While fractional ownership means shared space, it also eliminates much of the worry and work of a privately owned lake home.
A required owners association fee typically covers insurance, taxes, interior/exterior maintenance and other expenses, while the resort handles actual upkeep. So when owners arrive at the Lake, there’s no time spent on home repairs or outdoor honey-do lists.
Often aligned with a resort, unit ownership can give access to on-site restaurants, spas and other amenities.
Fractional ownership is a fast-growing sector of the vacation home market. Unlike a timeshare, which buys only use of a place, fractional ownership means buying an actual structure. As with regular property, owners can sell their share or leave it in their will.
Around Lake Superior, three main companies offer fractional buys on condos, townhomes, villas or log cabins. The three are all in Minnesota: Bluefin Bay Family of Resorts, Lutsen Resort and Odyssey Resorts, which manages Larsmont and other properties with such options.
The Ryans bought a quarter share of a unit at Larsmont before any cottages were built. Opened in 2007, the resort includes 40 two- and three-bedroom cottages. Twelve were sold as whole units. The rest were divided into quarter shares, and some owners bought more than one share of one or multiple cottages. Properties currently available through Odyssey Real Estate, which owns Larsmont, run from $479,000 for a whole 2-bedroom unit to $119,000 for a quarter share of an off-Lake cottage.
A nicer price and freedom from upkeep aren’t the only reasons Marilyn loves their cottage. “I appreciate the fireplaces in the suite and living room, the large bathrooms in the master and (second-floor) suite and the well-appointed kitchen, making cooking more of an activity than a chore.”
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Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
The Ryans and Feltons own shares of units like these at Larsmont Cottages, with open spaces and views of Lake Superior.
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Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
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Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
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Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
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Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
At Larsmont, the units have virtually identical floor plans. The main floor has a kitchen that flows into an open dining and living area, a stone, three-sided gas fireplace and a walkout lakefront patio. On the first floor is a master suite. Upstairs is either a single bedroom or a bedroom with private bath and another suite. The upstairs has a separate entrance and can be rented independently, giving owners and renters privacy even if they’re there at the same time. Or owners can choose to keep the whole place to themselves – though few do.
“People buy at a resort for four reasons – security, amenities, lack of maintenance and revenue return,” says Lavonne Christensen, a real estate agent at Odyssey Resorts. “If you didn’t want the revenue – you’d buy a cabin on the lake.”
The Lake attracted Jim and Diane Felton of Fridley. “We chose our unit because we definitely wanted to be very near the water,” says Diane, “but also wanted some grass in front as we are starting the grandparenting phase of our lives and wanted some space for playing.”
The ability to cut costs by renting sealed the deal; at Larsmont, it’s a 50-50 split with the managers. “In the first year, we nearly cleared our association fees, in spite of the fact that we used it a lot,” Diane says. “When I hear footsteps above, I think, ‘That’s cash coming back to us.’”
Like the floor plans, the décors at Larsmont are nearly identical, from furniture to appliances to duvet covers. Updates are chosen with a design firm and an owner advisory group.
“It’s a clean style,” says Marilyn. “Not a lot of knickknacks, not overly contemporary – comfortable but not too homey. It has a North Shore feel without everything you look at being a bear or a moose.”
“There’s an amazing amount of storage space on the inside,” adds Diane. “I can put away my things and not look at clutter. Clutter isn’t vacation for me.”
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Courtesy Felton family
Fractional Ownership: Buying into a Shared Getaway
The family of Diane and Jim Felton.
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Courtesy Ryan family
Fractional Ownership: Buying into a Shared Getaway
Pat and Marilyn Ryan.
Owners can keep personal items in one of the four locked storage closets in each cottage. “Being able to personalize the home when we are there helps you forget that it is a space you share both with other owners and renters as well,” says Marilyn.
Many bring pets, too; only four cottages are pet-free.
George Johnson, an original cottage share owner and the first association president, says at Larsmont the fee arrangement, which builds an update fund, assures well-maintained buildings. “So if the carpet goes bad, you replace the carpet. So many places, they leave it up to the owners. Some owners do it, some don’t. Then after 15 years, you need a new roof, new siding and (have) no money to do it.”
“The original board was very insightful,” says Chuck Paton, general manager of Larsmont Cottages. “That foresight to build funds to update the resort and make it fresh and new is a terrific resource for management to present to the travel market.” It can also add resale value.
“This is one of the key things that made a difference to us,” says Diane. “We choose to pay more generously into a fund. I’m going to get to enjoy this being nice. I care because we’re here a lot.”
Courtesy Larsmont Cottages on Lake Superior
Fractional Ownership: Buying into a Shared Getaway
Thirty-six units at Larsmont Cottages are directly beside Lake Superior and four sit back from the shore in a wooded area.
The resort management schedules use of each unit with a rotation that gives each owner time on holidays and prime vacation weeks at least once every four years. Trades for desired weeks, even with owners of other units, might be arranged. “Larsmont management handles the negotiations about juggling schedules, which is very professional,” says Diane. “I think it would be difficult to have owners do that themselves as it could create hard feelings. If people know one another, they are certainly allowed to make trades, and we have also done that with another owner of our unit as we have come to know them.”
While owners of the same unit may never meet, they often develop friendships with owners of other cottages. “You can build your own neighborhood,” says Marilyn. “It fills that sense of community you probably don’t get at another resort. That was a nice surprise.”
What is not surprising is that shared owners enjoy time at the shore just as they would with a cabin of their own – with one happy exception.
“One of our favorite activities is to be mesmerized by the Lake, which can range from perfectly still and quiet or rocking, rolling and raging – sometimes in the same day!” says Marilyn. “We love the quiet morning hours with a cup of tea and our crossword and sudoku puzzles. We spend a lot of time reading. The best part is the freedom you feel when you relax and do nothing without feeling guilty that some project needs your attention.”
Good to Know
Thinking of fractional ownership? Sirkins & Associates, a California law firm specializing in such real estate, suggests asking:
- What is your per-night cost? Add all expenses, including management fees and dues, then divide by the number of days the property can be used each year.
- Does the share owner have any control over cost increases (fees and dues) and over property management and maintenance?
- What restrictions apply to resale, and what financing will be available to a buyer? Financing options might be limited for fractional ownership. A Wall Street Journal story on fractional ownership lists seller financing through the management company, an equity loan on a primary home or a consumer loan as options.
– www.sirkinfractionallawyers.com
Duluth freelance writer and blogger Felicia Schneiderhan is an outdoors-oriented mom raising three active children (all younger than 4) with her husband, Mark.