| User Opinions (10 votes) |
100%
0%
|
|
Thank you for rating this answer.
|
© March 16, 2007 by D. Andrew Sirkin.
Any reproduction or use of this document or any part of its content
requires the written consent of the author. Contact Mr. Sirkin at
dasirkin@earthlink.net, or visit www.andysirkin.com
It is useful to divide fractional vacation home management tasks into four categories: usage allocation, accounting, cleaning, and repair. Any of these jobs can be handled by either co-owners or outside professionals, can involve compensation of not, and can be combined as needed for efficiency or convenience.
The tasks involved in usage management will be different depending on whether the group is using a Usage Assignment Approach or a Pay-To-Use Approach. If the Usage Assignment Approach is employed, usage management will involve administering the usage assignment system for each year and Vacation Home Fractional Ownership by D. Andrew Sirkin page 6 of 15 keeping track of the results. If the Pay-To-Use Approach is employed, usage management will involve administering the advance co-owner reservation system, soliciting and managing rentals by non- owners, and tracking (and possibly collecting) co-owner usage fees and rental payments.
Accounting management will involve collecting payments from co-owners (and possibly from rental tenants), paying bills, and keeping records. To avoid disputes and cash shortfalls which could result in credit blemishes and even loss of the property, it is absolutely essential to collect co-owner payments based on a budget and regular assessment system rather than “as needed”. This means that at the end of each year, the accounting manager estimates all of the expenses for the following year, including mortgage, property tax, insurance, maintenance, repairs, improvements, utilities and management, offsets those expenses against any anticipated income from co-owner usage fees or rental income, and determines the amount, if any, that will be needed from each co-owner to pay the bills. The anticipated expenses should include some reserves for long-term recurring expenses such as painting, roofing, system upkeep, and furniture and appliance replacement. The amount required from each co-owner should then be divided into equal monthly or quarterly payments, and each owner should be required to contribute his/her payment on schedule. In this way, each co-owner knows with a fairly high degree of precision what will be expected of him/her in the coming year, and it is easy to track whether a co-owner is meeting his/her obligations before a significant problem develops. Obviously, unforeseen expenses can always arise, but it is still critical to budget for the expenses you know you will have. It is very risky, and an awful lot of work, to wait until funds are needed and then attempt to reach each owner to try to collect.
Cleaning is a management task with a surprisingly high potential to cause displeasure and discord within the group. Most co-owners enjoy using their vacation home much more when they arrive to find it clean and orderly, and cleanliness is essential for successful rental to non-owners. Unless an unusually consistent and high standard of cleanliness and order prevails among all of the co-owners in the group (and their families and friends), it is likely that resentment and even anger will develop over the condition of the home when certain users leave. It is also true that you are supposed to be on vacation when you use the home, and you may not want to have to spend the last day of your vacation cleaning. For all of these reasons, I strongly advise vacation home co-owner groups to employ a cleaner or cleaning service to clean the property on a regular basis. This can be done most efficiently when the usage blocks are fairly uniform in length, and the cleaning corresponds with the end of the blocks. The cleaning person can also monitor the condition of the property, and inform the co-owners when a particular co-owner or guest has damaged, broken or stolen something. One of the best things about vacation home co-ownership is that you can spread the cost of this type of service over the entire group, rather than paying for it yourself.
Repair management is important because without it, no one person is responsible for keeping the home in good repair, and small inexpensive problems can develop into large expensive ones. The repair manager should be responsible for periodically inspecting the property, fielding comments and complaints from co-owners, and arranging for and supervising repairs. If the repair manager will be doing any major repairs him/herself, it is important to establish, before beginning work, whether the repair manager will be compensated and, if so, how much. “Time and materials” compensation should be avoided because it often leads to disputes, particularly where the repair manager is not a professional contractor and may not use his/her time and/or the materials efficiently. A much better approach is to establish a scope of work, time for completion, and payment amount in advance. This avoids most potential disputes and allows the group to compare the repair manager’s proposal to bids from outside contractors.
|
Search the Knowledgebase
Browse by Category
Print this page
Email this page
Post a comment
Subscribe me
Add to favorites