Fractional Ownership - FAQ

FAQ's



Question:

What is Fractional Ownership?

Answer:

Fractional Ownership is a legal framework that allows you to divide the ownership of a property into shares and sell these ownership shares at a greatly reduced price compared to the full ownership cost.

Question:

Can any property be sold on a Fractional basis?

Answer:

The answer in the majority of cases is yes. Part of our legal due diligence is to check that there are no legal issues with either the country or the land that the development is located on that would restrict a Fractional Model being introduced.

Question:

Does the price of the property increase when sold on a fractional basis?

Answer:

The price of a property has to increase when sold on a fractional basis to cover the extra work involved in selling to more than one purchaser. Our model dictates a 20% increase in the value.

Question:

Why charge 20% increase in real estate value?

Answer:

There is more work involved when selling a property on a fractional basis. Fractional Ownership will increase sales numbers as you can go to the market from 75% to 87.5% less than a traditional sale but the introduction of the fractional model has to benefit all the parties involved in the process. The selling agents will welcome the increase in sales numbers but an additional income of 10% per property will be a great motivation to concentrate on selling fractional properties.

Question:

What happens to the 20% increase in property value?

Answer:

Our Fractional Model dictates that 10% goes to the selling agents, 5% to the Affiliate partner and 5% to ourselves as the Fractional Model Provider. If all the parties enjoy the benefits of a fractional sales strategy the strategy will be a success resulting in increased sales numbers for the developer.

Question:

Why do the fractional homes have to be furnished?

Answer:

As there is more than one owner to a house the house has to be sold with everything that an owner would require. We will provide you with an inventory of furnishings and accessories specific for each property offered on a fractional basis.

Question:

Who provides the furniture?

Answer:

It is always a good idea to use the services of a professional furniture company and work with them to choose the furniture most suited to the price point of the house.

Question:

Who pays for the furniture?

Answer:

The furniture costs are added to the cost of the property after the 20% fractional increase in value has been accounted for. This is then divided by the fractional owners which represents great value for money for your purchasers as they don't have the headache of furnishing the house and they only have to pay a fraction of its cost.

Question:

Why does the property have to be managed?

Answer:

As there are multiple owners to the property a structure has to be in place to manage all the aspects of the house for them. The owners will expect the property to be looked after and cleaned prior to their use. This is huge benefit to your purchasers as their property comes to them fully managed at a fraction of the cost.

Question:

How do I decide on how many shares are correct?

Answer:

You have to strike a fine balance between the shares given, the increase in real estate value to pay for the work involved in selling to multiple purchasers. If you had 20 shares the price per share would drop. However someone has to be paid to sell each share so the real estate value would have to increase by 100%. Your purchasers would very quickly work out that this was not good value for money as they are in fact paying double the true value of the property. Your clients would also only get 2.5 weeks use per year. During the due diligence process we look at the development in detail and propose the best shares to sell the property with taking into account property price, development type, seasonality of the location, incomes to the agent network etc.

Question:

Is Fractional Ownership a new idea?

Answer:

No. Fractional Ownership for property is very established in the USA and Canada. The USA fractional property market in 2007 was valued at close to $2billion. It is a relatively new concept for the UK and European property market but even here it’s an accepted and established ownership vehicle for yachts, private jets, helicopters, performance cars etc. which are of comparable value. There is much being talked and written about Fractional Ownership and the huge benefits it affords purchasers and we feel that is a powerful tool in combating the current economic problems but see fractional as being an established and mainstream ownership product as it is in other markets.

Question:

Are your legal teams experienced in different countries?

Answer:

Very. Our legal team have experience in the global real estate market having experience in over 50 jurisdictions.

Question:

How will it increase sales?

Answer:

You will be able to demonstrate to a purchaser that they can buy into a property for vastly less than they had thought. You will be able to sell to purchasers that possibly could not afford a property at all and move people from a 2 bed apartment to a 3 bed villa with a pool. It makes ownership of the property so much more affordable with little impact on the use that the majority of purchasers get when from an overseas property. Furniture, maintenance and ongoing annual fees are also vastly less. What else is there in the market that can give you this type of selling power?

Question:

How will it maintain profits?

Answer:

The current economic climate has reduced the affordability of overseas properties. Many developers are giving huge discounts or including financial incentives to promote sales. This reduces profits considerably and has little effect to encourage sales. Fractional ownership allows for a property to be sold at up to one 1/8th of its full ownership price with no reduction in overall profits.

Question:

Do you provide any marketing materials?

Answer:

We are trying to make the introduction of Fractional Ownership as cost effective and simple as possible. To this end we provide you with a download Fractional Brochure for you to give to your purchasers that explains Fractional Ownership. We also provide wall posters for your sales areas so that purchasers can see and ask you to explain the benefits of Fractional Ownership. These are free to download all you need do is have them printed. Once the increase revenues are coming in you will have the time and monies to prepare and print your own brochures if you wish.

Question:

How do I decide which Usage Calendar to use?

Answer:

The Usage Calendar is key to the success of the fractional sale. You need to analyse how a person will use the property. Is it weekly holiday, 2 weekly holidays, a combination of these or are you targeting the retired couple that will use the property for the whole winter season. Our Usage Calendars accommodate all these scenarios. We will work with you to make sure that the Usage calendar is appropriate.

Question:

Why do you provide a Property Portal?

Answer:

You will already have your own sales teams, selling agents and routes to market. Between us these routes to market will be educated in the huge benefits to both yourselves and your purchasers when using our Fractional Model. We have tied the success of our company to the success of your fractional sales strategy. We think it hugely important to have a Property Portal that we upload your properties to for FREE giving you another important route to market. The beauty of our model for the purchaser is no matter what the development or where it is it will be the same Fractional Model at its heart. Our portal will be an easy to use, easy to understand website for purchasers who will be able to take comfort that the Fractional Model is sound and use the website to choose properties as they would for a traditional full sale.