Ramen Retirement: Economics of fractional vacation property ownership (RESTRICTED)
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Ramen Retirement: Vacation Property Economics
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InputsOutputs
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Property Purchase
Comparison: 100% ownership vs. Fractional
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Property price$3,000,000100% ownershipFractional
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100% ownership leverage65%Cash investment$595,000$130,769
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Fractional leverage0%Cash costs$19,383$5,704
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Interest rate5%Days used2828
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Cost / day$692$204
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Property EconomicsAvailable days21928
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Percent days peak50%Lowest possible cost / day$89$204
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Peak price$900
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Off peak price$750Fractional Economics
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Peak occupancy50%Fractional price$130,769
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Off peak occupancy30%Cash upfront$130,769
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Price growth per year5%Equivalent value of usage$23,163
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Cost growth per year3%Cash costs$5,704
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Mngmt % of revenue20%After tax cash value$17,460
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After tax yield13.35%
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Fractional EconomicsImplied pre tax cash value$31,745
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Shares13Implied pre tax yield24.28%
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Mngmt % of asset value1.00%
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Marginal tax rate45%5 Year IRR28.41%
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Profit share20%7 Year IRR28.98%
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Roll expenses to debtNo10 Year IRR29.47%
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Tax adjusted return?Yes
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