It's a common scenario - you're the type of family who lives for the annual ski trip, and perhaps you pick a new ski spot every year or maybe you go to the same ski resort year after year. The adventure of traveling to the unknown year after year is appealing, and with some careful Web research, you easily find a resort destination and lodging accommodations to best suit your needs for this particular ski trip. But if your family has found THE resort to put down ski boots, then buying a second home or vacation condo at your favorite hill may start to sound like a good investment.

If you start looking around at mountain town real estate, you'd be lucky to find prices starting at $350K for a small condo, with the upper range for slope side homes soaring into the millions. Outright owning a condo or vacation home at a ski resort is out of the question, even for most families with an upper level income.

The idea of sitting through an irritating presentation for timeshares scares you (like most people), but the new and improved concept of  fractional ownership of a ski condo sounds a lot more tempting. You actually own a piece (or small sliver of) real estate, you are guaranteed more than one week per year, and the emotional value of having a mountain to call (a second) home seems priceless.

Even while the idea seems sound, you may not be thinking very clearly, with all the visions of powder dreams dancing through your head. So who should you turn to for advice?

That old, often ignored friend, common sense. Do you remember him, the one you ignored when you bought the neon pink and yellow ski parka in the 80's? He's telling you that it's not as sweet a deal as it looks.

Another voice of reason is certified financial planner and frequent contributor to Zonder's ski resort vacation rental guides, Ken Clark, who says prospective buyers need to consider these points when considering fractional ownership at a ski area: 

1. You are locking yourself into one place. In a couple years, when your little gem of a ski resort becomes over-developed, or your kids come to you whining about how they want to go to the Bahamas, you're going to feel trapped. While there's some exchange privileges with other clubs, the options are usually fairly limited. If variety is what you need, you should look at a timeshare or condo rental instead.
   


2. It's likely going to take you 10-20 years to break even on your purchase price. Did you really you could buy a place at the same bargain rate you can rent a slopeside condo for? The numbers are worse when you consider the loss of interest or growth on the money you paid to purchase your fractional share. You better be sure that you want to spend a lot of time there over the rest of your life. 


3. Except for the most prestigious programs (the Ritz-Carlton, St. Regis, etc.) resale values are horrific. You will be lucky if you get 20-30% of your original purchase price back. That means changing your mind down the road, or possibly needing the cash for something else, could result in a huge loss. 


4. Your tax deductions are limited as with most secondary or vacation homes. Further, there are complex rules about what is deductible depending on whether or not you rent out the property to others. The cost of tax preparation on a fractionally owned property can add $500 - 1,000 annually. 


5. A ski vacation is supposed to be an escape from life. But, when you own a vacation property and have even limited responsibilities in the management and upkeep, it can steal a lot of your joy and energy when you actually visit. It's tough to fully enjoy a place you have come to resent.

At best, fractional ownership might save a few dollars for the family who skis under four weeks per year, but at worst; it will fast become an investment you've grown to resent.

The Bottom Line: Don't invest in fractional ownership if you can stay in an affordable ski-in/ski out vacation rental. 

Unless you have so much disposable income you don't know what to do with it all, investing in a vacation ownership club or timeshare property may not make the most financial sense for your family. On the upside of renting, you can often take advantage of many of the same resort amenities when you book a luxury vacation rental, but without the financial risk.

Until you know where you want to buy that second home, you can always book a vacation home or condo to rent at a different ski resort every year, and take them for a test run. Variety is the spice of life, after all.