Generic Benefits Of Fractional Ownership

Fractional ownership of property is the joint ownership of a luxury property, through an accepted legal structure, where you have a usage agreement determining how often you are entitled to its use and where all the supporting services are supplied on your behalf. The upkeep costs are shared between the shareholders. It's a way of obtaining perpetual access to an exclusive vacation property. Its property ownership and your share are underpinned with real property value. You only pay for the portion or fraction you own and use and are not exposed to excessive.

Upkeep and maintenance costs.

The hospitality, finance, rental and maintenance management is done on your behalf giving you the real enjoyment of a holiday home without the hassles. Time is allocated and shared on a roster system, so you know years in advance when it's your time to take a break - a great way of ensuring structured relaxation.

Fractional ownership is a way of getting access to otherwise unaffordable destinations. When no longer used, fractional ownership can be traded. You can sell your share with the greatest of ease through recognised promoters.

Additional features of high-end fractional

A central reservation system servicing the members. Flexibility in terms of usage any time of the year subject to availability. An Operator supplying basic services such as housekeeping and laundry. Often features multiple locations within one country. An International Exchange facility. Additional Features Of A Private Residence Club Typically 14 members per residence with an annual usage right of 21 days. A 5 star Hotel Operator on the premises servicing the private residence.

The absolute pinnacle in terms of quality and service - equivalent to the Presidential Suite in a 5 star deluxe Hotel. Members have access to all the facilities and amenities the hotel offers. Often in resort locations or leisure-driven cities. An International Exchange facility at the highest possible level. Average price range in South Africa starts at R700 000 and internationally from $250 000 to $450 000.

The Important Calculations of Fractional Ownership

As a purchaser of a fractional product, there are three important financial considerations to bear in mind:

The Real Estate Value - ";The Multiple Calculation": Take the number of fractions in one residence or apartment and multiply this number with the asking price for the fraction. The total sum should not exceed 1.5 to 2 times (the multiple) the price you would pay if you were the only owner of the property.

The Usage Value - "The Pay-Back Calculation": Take the number of days of your annual usage right and multiply this with the rate you would pay for similar accommodation in a fully serviced hotel offering the same standard and quality of service. Deduct from this annual value, the annual membership fee, and you will arrive at the adjusted annual value. Take the purchase price of the fraction and divide this by the adjusted annual value to arrive at a number of years you will take to "payback" your initial purchase price. Globally, this payback is between four to seven years, which effectively equates to a return on investment between 15% and 25%.

The Likelihood of Capital Appreciation: Check whether the product is sold in a market where there is a rising property and hospitality market, as the underlying fundamentals of this product are real estate and hospitality. Ensure that the product is a deeded product and the usage rights are in perpetuity (eternity). After doing these calculations you should find that fractional ownership adds up to an attractive proposition for luxury holidays year in and year out.

Now... 8 easy steps to acquiring your first fractional home:

Decide which destination best suits your holiday profile, be it golf, sea, game farms or an international destination. Assess the options available at the chosen destination, i.e. are you interested in a 2 bedroom or a 3 or 4 bedroom unit. Assess the weeks available. Basic fractional products are allocated on a 28-day per year basis, structured into four weeks per annum - one in every season. This roster moves on with one week per annum. This implies that all weeks are of equal value.

A fraction in the Pam Golding Fractional Product at Pinnacle Point, a 4-bedroom, 4-bathroom freestanding villa will cost you R430 000. This is payable by means of a 15% deposit with the balance payable when occupation is granted or in the event of a to be constructed villa your funding is drawn down as the project progresses. Upon completion, the usage agreement is activated, ensuring you the use of it four times per year. At this time the annual running cost budget is to be funded by the shareholders, amounting to a contribution of approximately R900 per shareholder per month. Weeks not used can be rented out through the rental management system. Rental on a 4-bedroom unit is approximately R3200 per day. The income so derived directly accrues to the shareholder.

Pam Golding Fractional Ownership can offer no guarantees in this respect. The payback calculation on this investment is five years. In other words the cost of renting this villa for the 28 days per year, over five years is equal to the outright purchase amount.

Note: Pam Golding does not promote the purchase of a fractional as an investment or as a guaranteed high yielding financial investment, but based on the expected increase in the share price, the bare minimum is already a means of recouping your holiday expenses after five years if you should sell.

Pam Golding Properties Fractional Ownership specialises in promoting the joint ownership of luxury properties worldwide. We focus on all aspects of the industry, from product development and construction, marketing and sales to post sales product management. We make use of an extensive distribution platform of in house lifestyle consultants as well as a dedicated licensee program of highly skilled external network advisors.