Lets talk about Fractional Ownership in the traditional sense, and it’s pitfalls, and a new kind of Fractional Ownership.
Fractional Ownership of Recreational Properties became popular, during the last real estate boom. The typical revolving occupancy [one week in every four for a quarter share] was an attempt to meet the needs of the greatest number of potential buyers. The big selling point is a low cost form of ownership, with all services provided and the potential to earn rental income. The hitch is, this form of high volume occupancy turnover has caused operating costs and condo fees to soar. As a result, there is almost no re-sale market and owners, in an attempt to offset costs, have been forced to push properties into high cost rental pools.
Here is an idea for low cost fractional ownership for Non Strata Title recreational properties.
The concept is simple. Divide ownership of a property into periods of occupancy [ideally coinciding with seasons.] Sellers will then be able to meet their pricing objectives, and offer buyers a tailor-made product that is much more attractive.
For example, a fully furnished recreational property in the Columbia River Valley of British Columbia, near the famous Bugaboo heli skiing and hiking facilities, could be divided seasonally into two natural three month periods: January through March and July through September. A third ideal period would run April to June for golf on the many championship courses in the area.
Priced competitively with Strata Title Quarter Share potential user/owners have all the advantages of a private residence without the hassle associated with Strata Title and rental pools.
To make this work, an organizational entity is required to provide buyers and sellers with fee based services to register, transfer and manage ownership. In a typical recreational hub all of the typical property management services are readily available, so the ultimate cost to the owner is minimal.
The actual form of ownership may vary depending upon title restrictions imposed by Regional Districts, but the safest and most tax efficient are those associated with an LLP [a Limited Liability Partnership], which is easy to establish and maintain. Typically such a partnership has a Managing and General Partner and one or more Limited Partners, who in this case are the owners.
This type of ownership is now becoming popular in areas like Whistler, where there is a high vacation property inventory not moving (not selling or renting.)
Want to talk more about this idea? Contact me al@anytimefractionalinterest.com
http://www.anytimefractionalinterest.com
