What is fractional ownership
Ownership implies shared ownership or in other words co-owning an asset.
The concept of shared ownership is as old as civilization itself. Co ownership of business ventures is common practice. Public and private companies (with multiple ownership) are the biggest contributor to the world economy.
Property syndication (co-ownership of property) is a standard practice in the commercial sector. It was successfully introduced in the leisure industry and dubbed Fractional Ownership.
The Benefits of Fractional Ownership:
- Cost effectiveness You only pay for what you use. Owning a holiday home outright results in it costing you 100% yet you only have limited use thereof.
- Affordability Leisure property has become very costly to acquire and maintain. Sharing these costs makes financial sense.
- Capital growth You benefit directly from the growth of the asset. Unlike timeshare where you only have usage rights of the property, fractional ownership allows you to share in the growth.
- Income Share in the income derived from the rental pool.
- Hassle free holidays Properties are well maintained and managed on your behalf throughout the year.
Is it Timeshare?
No, even though Fractional Ownership offers all the advantages that timeshare does, it differs in one fundamental way: Timeshare only allows you the usage of the property for an allocated period. Fractional Ownership offers you the benefit of both usages as wee as direct ownership.
Can Fractional Ownership be financed?
Yes, it can. Because it is property, it can be bonded by banks. The same rules apply as with any other property acquisition.
Can you sell your fraction and when?
Your fraction can be sold at any time for as much as the market is willing to pay. The only restriction is that your fraction must be offered to the other shareholders first before releasing to the open market.
When do you get to use your fraction?
A rotational roster is used to determine when you can use your portion. It moves on by a week per annum in order to allow everybody fair usage. In most cases a distinction is made between own-use weeks and the rental-pool. Own-use weeks are for the benefit of the owners and fall within the school holidays. The rental-pool is utilised to generate an income for the shareholders.
Article by: Pierre Griezel - www.propertiesgardenroute.co.za