Post by TheTravelBug on Jan 16, 2011 13:04:00 GMT
Originally for buying shares in private jets, the idea of fractional ownership now covers all sorts from property to boats to private ownership clubs. It differs from a time share arrangement in that you actually own a percentage of the asset, not just the right to use it at certain times.
Taken from Wikipedia:
Fractional ownership simply means the division of any asset into portions or shares. If the “asset” is a property, the title or deed can be legally divided into shares. In certain instances this is done by creating a "mezzanine structure", i.e. creating a company which owns the property then allowing multiple owners or investors to own shares in the company. Those shares can then be purchased and owned by more than one individual. The reasons for a "mezzanine structure" can vary. Two common reasons are to allow transfer of shares without the need to reflect changes on the title or deed to the property, and for tax benefits.
Shared ownership of the property and its deed will also entitle shareholders to certain usage rights, usually in the form of weeks.
Conceptually, Fractional Ownership is not the same as Timeshare. Fractional Ownership affords much of the freedom and usage benefits offered in timeshare, however, the fundamental difference with fractional ownership is that the purchaser owns part of the title (as opposed to units of "time"). Therefore, if the property appreciates in value, then so do the shares. As with whole ownership, fractional owners can sell whenever they deem necessary or prudent, releasing the capital growth from their "bricks & mortar" investment.
The practice of joining together with family and friends to share ownership of vacation property has been around for many years. But the fractional property industry started in the US in the Rocky Mountains ski resorts in the early 1990s. These first fractional developments recognized that people did not want to buy whole homes, which they would only use for a few weeks a year in the mountains. According to research firm Ragatz Associates there were over 250 fractional developments in North America in 2006 and fractional properties can now be found throughout the world.
Outside the USA a non-commercial form of fractional ownership has been in existence for several decades. In this form, otherwise unconnected individuals (rather than family or friends) form private syndicates to purchase, for example, vacation property or boats. These syndicates operate as private member groups with small numbers on a non-profit basis, generally just sharing expenses and usage. These groups can involve assets ranging from modest apartments or condominium type properties to multi-million euro / dollar properties, and leverage their ability to make collective purchases of additional assets such as boats or vehicles as additional facilities, while retaining control entirely within the membership of the group.
The popularity of the term fractional ownership has caused extensive rebranding in other industries where similar concepts, such as real estate timeshares, were already well established.
Fractional ownership divides a property into more affordable segments for individuals and also matches an individual's ownership time to their actual usage time. A fractional share gives the owners certain privileges, such as a number of days or weeks when they can use the property. Occasionally, the property is sold after a pre-determined time, distributing the relative proceeds back to the owners. A few private owner-groups have developed highly sophisticated usage allocation schemes and other features based on the principle of attempting to get as close as possible to the flexibility of individual ownership, and only compromising this to the minimum extent necessary to accommodate multiple owners. In such schemes the basic agreement is between the members themselves, whereas in most commercial fractional ownership schemes, the owner's principal relationship is with the property developer and/or promoter of the scheme.
Taken from Wikipedia:
Fractional ownership simply means the division of any asset into portions or shares. If the “asset” is a property, the title or deed can be legally divided into shares. In certain instances this is done by creating a "mezzanine structure", i.e. creating a company which owns the property then allowing multiple owners or investors to own shares in the company. Those shares can then be purchased and owned by more than one individual. The reasons for a "mezzanine structure" can vary. Two common reasons are to allow transfer of shares without the need to reflect changes on the title or deed to the property, and for tax benefits.
Shared ownership of the property and its deed will also entitle shareholders to certain usage rights, usually in the form of weeks.
Conceptually, Fractional Ownership is not the same as Timeshare. Fractional Ownership affords much of the freedom and usage benefits offered in timeshare, however, the fundamental difference with fractional ownership is that the purchaser owns part of the title (as opposed to units of "time"). Therefore, if the property appreciates in value, then so do the shares. As with whole ownership, fractional owners can sell whenever they deem necessary or prudent, releasing the capital growth from their "bricks & mortar" investment.
The practice of joining together with family and friends to share ownership of vacation property has been around for many years. But the fractional property industry started in the US in the Rocky Mountains ski resorts in the early 1990s. These first fractional developments recognized that people did not want to buy whole homes, which they would only use for a few weeks a year in the mountains. According to research firm Ragatz Associates there were over 250 fractional developments in North America in 2006 and fractional properties can now be found throughout the world.
Outside the USA a non-commercial form of fractional ownership has been in existence for several decades. In this form, otherwise unconnected individuals (rather than family or friends) form private syndicates to purchase, for example, vacation property or boats. These syndicates operate as private member groups with small numbers on a non-profit basis, generally just sharing expenses and usage. These groups can involve assets ranging from modest apartments or condominium type properties to multi-million euro / dollar properties, and leverage their ability to make collective purchases of additional assets such as boats or vehicles as additional facilities, while retaining control entirely within the membership of the group.
The popularity of the term fractional ownership has caused extensive rebranding in other industries where similar concepts, such as real estate timeshares, were already well established.
Fractional ownership divides a property into more affordable segments for individuals and also matches an individual's ownership time to their actual usage time. A fractional share gives the owners certain privileges, such as a number of days or weeks when they can use the property. Occasionally, the property is sold after a pre-determined time, distributing the relative proceeds back to the owners. A few private owner-groups have developed highly sophisticated usage allocation schemes and other features based on the principle of attempting to get as close as possible to the flexibility of individual ownership, and only compromising this to the minimum extent necessary to accommodate multiple owners. In such schemes the basic agreement is between the members themselves, whereas in most commercial fractional ownership schemes, the owner's principal relationship is with the property developer and/or promoter of the scheme.