Canada's baby boomers are interested, active and aging. They are also getting tired.The driven achievers have expanded on the work ethic of their parents, and cherish vacations as a time to step back from the frantic pace of their day-to-day lives and reconnect with family and friends in an inspired setting. For decades, the fulfillment of that dream has meant retreating to a cottage, which requires a substantial financial investment and a lot of work. That's why boomers are among the target markets for fractional ownership of vacation properties -- a creative concept making headway in North America.

The term refers to a particular brand of shared ownership - similar to the practice that individuals and corporations have used successfully to afford aircraft, yachts and even exotic cars. In real estate, the concept differs substantially from timesharing, as purchasers own equity in the property in addition to the opportunity to use it for a specified amount of time each year.

Popping up in Canada from coast to coast, fractional ownership vacation properties are being developed to maximize under-utilized assets. Marketing studies show that in this country, owners of resort condos and cottages tend to use them on average between 17 and 21 days each year, with the lowest dipping to nine days. That translates to some pretty expensive holidays, considering the amount of time spent keeping the cottage and land in shape.

With fractional ownership, the vacation becomes pure holiday, as co-owners form an association that administers annual fees to handle maintenance, cleaning, upkeep and repairs. Shares can be kept forever, sold or gifted to someone else.

This type of purchase appeals to younger families, too, who might not otherwise be able to afford a cottage-style holiday.

"God's not making any more lakes," says Norbert Poll. He and his wife Maxine McKinnon are developing The Canada Club in Perth, Ontario on the Rideau Waterway System, and have begun marketing it as a fractional ownership opportunity.

"You share the cost, and when you're there, you concentrate your time on use, not mowing the lawn. You can adjust the amount of money you spend on a second residence to the amount of time you'll use it," Poll says.

"It's a dynamic idea," says Gloria Collinson, president of the Canadian Resort Development Association. She has been involved with the marketing of fractional ownership properties since the first two were implemented in Ontario. "My marketing company sold out Chandler Point in less than six months in 1999," she says. "Two years later we did William's Landing, which took 14 months to sell. Today the units are worth substantially more than the owners paid, and people don't want to part with them.

"I believe the Cottages at Port Stanton is now 80 per cent or more sold. Sales are also well under way at two other large projects, Champlain Shores in Haliburtan and Muskokan Resort Clubs at Lake Joseph. At Taboo Resort, Golf & Conference Center, ownerships were sold in quarter shares, and Intrawest introduced quarter shares at Whistler, B.C. and Mount Tremblant, Quebec. On the south coast of Nova Scotia, White Point Beach Resort is just starting fractional ownership options, and we'll see more coming this summer in other areas."

She has also just completed the project at Corbett Cove, a stunning lakefront retreat at the north end of Muskoka's Lake of Bays in Ontario, consisting of 10 units with 10 owners each.

"It was launched one year ago and is now totally sold and construction completed," Collinson says. "Corbett Cove is the first multi-unit project to offer fractional ownership here. With shares averaging $65,000, the possibility of owning lakefront cottage property on a pristine Muskoka Lake becomes an affordable reality."

That's the case for Betty and Geoffrey Clark, who purchased at Corbett Cove.

"We think it is an absolutely splendid property, and we're delighted that we own a portion and will not use up our stay in a few years," says Betty. "We love this quiet lake, and being 15 minutes from Algonquin Park, we can hike and stay active, then close the door and the maid comes in. What a wonderful feeling. We can't wait." Corbett Cove graces the site of the former Pine Grove Inn, a once-grand vacation destination.

"Being able to rebuild some of this old tourist commercial infrastructure that's currently shut down or dilapidated makes Muskoka competitive again as a destination," says Tom Pinckard, a lawyer, former mayor of Lake of Bays and a principal in Corbett Cove. "Seasonal resorts here don't generate enough profit to yield the capital to reinvest. Financial institutions are reluctant to lend the money, so private financing is carrying the load. It is happening elsewhere in Canada with run-down properties."

Poll and McKinnon, for example, are self-financing The Canada Club, which is situated on the site of a formerly deserted houseboat rental company headquarters they purchased under power of sale. They have spent five years revamping the large dancehall and property into a recreational haven.

As someone who has been active in real estate for more than 30 years, Pinckard has been watching the concept evolve from high-end resorts and aircraft.

"Real estate in cottage country overall has gone crazy in terms of price, and is out of reach for the average Joe," he says. "It may not make sense to buy a cottage anymore, even if you can afford it, because of the carrying costs.

"Fractional ownership of real estate is more complex than it is of an airplane. Developers have to consider building codes, zoning, environmental issues, and by-laws. What you can do varies from province to province, and even county to county."

Success with the concept in Muskoka has been hit-or-miss thus far, partly because people are just now becoming more aware of fractional ownership. Bill Johnson, an associate broker with RE/MAX Muskoka, says that the owner has taken Point Algonquin off the market temporarily.

"Marketing one of these properties requires a massive infusion of money up front for advertising," says Johnson. "We garnered a lot of interest through the Multiple Listing Service and a website, but couldn't reach our targets who are from the Southern Ontario area and the United States. We're in a holding pattern."

Myles Lawlor of Lawlor & Company Marketing & Communications Limited in Georgetown, Ontario, agrees.

"Marketing of these types of properties is rapidly becoming a highly specialized field," says Lawlor, "as traditional resort or new home marketing doesn't work. Informing the public is just part of the answer. Fractionalization is a different way of handling co-ownership. People who own resort-type properties have millions of dollars in assets in real estate, and they are discovering that municipalities will not allow them to subdivide for monster cottages. Yet the municipalities still want the tax base, tourists and off-road traffic. Appreciation for the fractional ownership concept is growing."

"Work with a proven and experienced team," cautions Lawlor. "Both the rewards and risks are just too great."

Resort Owners Group (ROG), an affiliate of Ontario-based Canadian Country Club Communities, is poised to market fractional opportunities on Balsam Lake, The Estates of King Valley, Mont Trembland and is already Marketing PGA Village, Florida.

"It's great for people who don't have the time to justify full home ownership, or for those looking to have ownership in a full-price property that is potentially out of their price range without sacrificing the lifestyle they seek," says ROG president and CEO David Yellowlees. "We're aggressively going after partnerships with developers across Canada, the U.S. and the Caribbean to expand the opportunities for owners to exchange usage with high-quality communities in other areas. We're also looking at the possibility of taking advantage of some of the Canadian Country Club Communities developments with this program, many of which are on golf courses and lakes, by bringing them into the fractional strategy. Resort Owners Group is also affiliated with Intrawest's Resort to Resort resort home exchange program."

In Kimberley, B.C., Northstar Mountain Village & Alpine Club offers quarter share ownership.

"After researching resort development in the U.S., especially high-end, the developers could see that this is the way the market is going," says sales and marketing coordinator Louise Willerton. "A year ago I had to explain fractional ownership to almost everyone who entered the sales office, but now nine out of 10 people are familiar with this method of purchasing vacation property."

Investment company general manager Dave Williamson lives in Vernon, B.C. He and his wife recently bought into two vacation properties -- a traditional condo at Silver Star Mountain Resort, plus a fractional at Northstar.

"Fractional ownership is amazing bang for the buck," he says. "We were attracted by the fact that this isn't timeshare -- it's an asset."

Quarter shares in Canadian Mountain Cabins, also in Kimberley, range from $89,000 to $104,000.

"Buyers gain all the convenience, access and advantages of owning a log home at a fraction of the cost," says CMC director Andy Harris. "It's a titled real estate interest, not a timeshare."

Harris, along with partners Patrick Lough and Mark Jennings-Bates, spent over two years perfecting the fractional ownership structure.

"Our cabin gives us ownership in one of the only log home resorts available in Western Canada today," says one of the first buyers, Don Strankman of Compeer, Alberta.

"Owning or staying in a log home is the quintessential Canadian experience," says purchaser Mike Vlessides from New York.

"As a rule of thumb, fractional ownership best fits the needs of individuals and families who stay 17 to 21 occupied nights a year," says Harris. "Full ownership is typically cost-justifiable when you stay more than 30 days annually at the same location. Renting tends to be cost-efficient when you stay fewer than seven days a year, and is not guaranteed if the accommodation is being utilized by the owner, other renters, or is undergoing maintenance."

"Fractional ownership is a hybrid of the timeshare and condominium concepts," says Brenda Paterson, developer of fractional ownership properties. "In areas like ours, these developments make sense. Tourists don't tend to be environmentally responsible; people with a vested interest are. Banks aren't helping resort businesses, so developers have to look for creative financing alternatives."

With our shifting demographics, the fabric of cottage country as we know it may change substantially in the near future - especially once the public becomes more aware of this concept.
-Photography by Randy Fiedler, November/December 2004