Telegraph UK – Article on Fractional Ownership

Further evidence of fractional ownership becoming more mainstream.

Fractional Ownership Article

When is Real Estate Not Real Estate?

Answer: When it is part of a fractional ownership scheme.

The irony here is that fractional ownership schemes are marketed with the advantage that they are underpinned by the value of real estate. However as soon as a home/apartment is put into a fractional ownership scheme it will no longer be valued in the same way as it would have been as a complete unit.

This isn’t necessarily a bad thing because resale fractions could (and sometimes have) been valued at more than their fraction of the original real estate value. This is by no means always the case though.

It is important to understand why real estate has proved such a reliable investment over the long term (ignoring the last year or so).

1. It is “produced” using a scarce/finite resource – land. This has a greater effect in crowded countries like the UK but is true to a greater or lesser extent with all locations.
2. It has an enduring utility value. Everyone needs a place to live. Even properties in typical vacation locations have this utility value, since they can be used by the support staff that are needed to run a resort.
3. Unlike most investments, you can borrow to buy it. This gives the potential benefits (and losses) of investment “gearing”.

If you compare a fractional ownership unit with the above you can see that 1 is still true, 2 isn’t (or is much reduced) and 3 is difficult to achieve (perhaps more so with the recent credit problems).

This is why I would advocate a winding-up clause in fractional ownership schemes, to enable re-alignment with the underlying real estate value (if this is advantageous).

Neil Robertson

Fractional Ownership News

parishomeshares.net

I recently had a quick e-mail exchange with Steve Navaro, founder of Paris Home Shares LLC

Steve’s company specializes in true fractional ownership schemes in Paris.  Two luxury schemes have been completed and another is in progress.  All schemes are properly structured with regard to the peculiar (by US/UK standards) French taxation laws.  Take a look at the available properties on his website or see summary information on Fractional Ownership News

Boat Fractional Ownership

Fractional ownership is ideally suited to boats.  I would almost say that anyone who owns a boat outright is either extremely wealthy or misguided!   Most boats spend a good proportion of the Summer months idle, and cost a lot to buy and maintain.  Surely with a bit of planning most people could share the ownership of their boat with at least 1 other person?  Wouldn’t you want to cut the cost of your boating by 50%?

I can still remember how amazed people were when I was 16 and I used to go saling in ”my own” yacht!  And by the way my family were not rich.  I managed to afford this because I bought it with 2 other people (and it wasn’t new).  It made me feel fantastic!

It just goes to show what you can achieve if you’re willing to go fractional!  See more on boat fractional ownership.

 Neil

Administrator

Fractional Ownership News

Disadvantages of Fractional Ownership – 2

Are you the sort of person who always has to have things there own way?  Would you be annoyed by someone moving your favourite chair?  Do you have frequent disagreements with your neighbours over petty issues?

 I t seems to me that fractional ownership does involve a degree of compromise.  This is reduced in some of the luxury private residence clubs where they will set everything up for you in great detail before you arrrive.  Even with these schemes there is the ultimate compromise over when you get to use it.  You have to be sensible enough to remember that the fraction owners that have use over your favourite weekend of the year actually had all the less favoured weeks last year!

 If you can’t compromise or ever see the other person’s point of view then I would suggest that fractional ownership might not be for you!  Do us a favour and buy something smaller on your own, in the middle of nowhere, where we don’t have to meet you

Neil

Administrator

Fractional Ownership News 

Fractional Ownership in France – Another Company

Checkout http://www.harmonyownership.com

They are specialists in French fractional ownership properties. I especially like their preference for fractional schemes setup via (French) limited companies – as this is exactly how I think they should be done!

Alternatively checkout these details of (proposed) European fractional ownership schemes.

Disadvantages of Fractional Ownership

I am an enthusiastic support of fractional ownership, but everything has its downsides.

It’s not suitable for everyone for the following reasons:

1. The obvious one! You can’t use your fractional property, real estate, yacht or whatever it is whenever you want! If you value spontaneity or you have the sort of life where it is hard to plan a vacation in advance then fractional ownership may not be for you. I have heard a counter argument to this (relating to fractional ownership of yachts) that says that because you have a fractional week booked you make an effort to use it, rather than thinking that you can use it anytime and not getting round to it! I’m not sure about this.

2. Not so obvious is the fact that with most fractional ownership schemes (for real estate) it isn’t possible/easy to get a mortgage to buy it. This means that you have to get the funds from elsewhere (typically a re-mortgage on your primary home). Also you cannot benefit from the “geared” investment gains that would result from purchasing real estate outright with a mortgage.

To be continued….

Take a look at the following resources if you are considering a fractional ownership scheme

Fractional Ownership in France

Now much as I might like to think I can be an expert on everything, sadly it just isn’t possible.  If you’re considering fractional ownership in France then take a look at the following:

www.nivas.com

This has lots of useful information on French fractional ownership.  If you are considering a possible scheme then please also list it for free on Fractional Ownership News!

Fractional Ownership – What do You Want it For?

It seems to me that people interested in the fractional ownership of property/real estate fall (very crudely) into two groups:

 The wealthy who are looking for a convenient way to experience luxury holidays at exclusive destinations.  For them the idea of making money from the real estate/property is (probably) less important.

The rest of us who would like to own a fraction of a property to enjoy cheaper holidays and perhaps get some captial growth over time. 

 Now for the wealthy the current crop of luxury private residence clubs or destination clubs would be ideal.  They have large annual charges and (in most cases) little prospect of capital appreciation.  But so what?  You get a luxury holiday with little chance of having to fight for your sunbed with the working classes!  This sort of “fractional ownership” is the answer to the holiday/vacation problem for the sort of people who solve time problems by hiring a butler or personal assistant!

 For everyone else you would be advised to try to setup a low-fee fractional ownership scheme with like-minded people.  The additional costs (over and above that for a normal property purchase) should be minimal and the ongoing costs exactly the same.  This raises the prospect of getting some real capital appreciation over time, especially if a winding-up clause is included in the agreement (see previous post on this subject).  Read more on the different types of fractional ownership.

But how can this be achieved?

 There are a number of companies/websites offering either the chance to advertise for people to join a fractional ownership scheme or help with the legal side of things.  Take a look at:

Yours2share.com
or
Fractional ownership news (my baby!)

Both of the above give you the chance to post a description of your proposed scheme for nothing.

Alternatively you could try advertising on/in mainstream property media. The advantage of this is that you reach a wider audience of people who might not have been considering fractional ownership. Disadvantage is usually higher cost.

Good luck!

Neil

Fractional Ownership – Now the accepted term?

When I first started www.reachtogether.co.uk I couldn’t decide quite what to describe the process of grouping together to buy things as. The result early my early posts/pages refer to “shared ownership” and “syndicates”. I think that fractional ownership is now the accepted term and have taken the opportunity to re-write 20 or so pages to make them consistent with this:

Fractional classic sailing yacht
Fractional apartment in Mallorca
Why consider fractional ownership
Privacy Policy
Drive a Ferrari
Spain, Costs Blanca Fractional Apartment
Folding Camper
Orlando fractional apartment
MGB Roadster
Fractional apartment in Cornwall
Sunseeker Martinique
Own a fraction in a holiday apartment in Brittany, France
Own a fraction in a vacation apartment in or near the ski resort of Morzine, France
Fractional Ownership Contract Considerations
Spain, Mallorca – Fractional Luxury Villa

Fractions in a brand new Delphia 29 yacht

Fractions in a brand new Delphia 37 yacht
New fractional scheme forming to purchase a beautiful new Dolphin 22 river cruiser
Privacy Statement and Terms and Conditions
UK – Fractional Motor Yacht, Nimbus 320 Coupe
Bulgaria,Bansko – Fractional Ski Apartments