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The Club

Fractional Ownership

Concept

Shared Ownership Options

Fractional Ownership. Or Investment Trust Ownership (ITO) describes direct property investment as a percentage share of owning property. It also allows multiple unrelated parties to share in the actual ownership without the need to borrow money.  

Substantial Savings. Fractional Ownership or investing in an ITO has its upsides. It is comparable to investing in conventional real estate but requiring a smaller up-front investment with less maintenance and taxes than purchasing an entire property. 

Full or Part-Time. Fractional Ownership is prevalent in resort real estate, similar to the co-living model where people buy shares in the real estate instead of renting. It makes sense because most people don’t have or want to live in a vacation resort the entire year. 

Global Partnership. Future House will consider entering into a 50% profit share with institutional and private investors in The Club or its other International developments in New Zealand, Australia, Samoa, Cook Islands, Canada, and the USA.

Timeshare

Past Investment Options

Minimum Use Rights. Timeshare was extremely popular in the sixties and seventies. However, timeshare, while worked well for families holidays in those decades, several negatives have come to the fore. You only have the right to use the property for a minimum period.  

No Title. With no ownership in the title, there is no share in the growth or capital gain in the property. A timeshare seller must find a timeshare buyer. With no limit on supply, most timeshare owners may only get a fraction of their investment back when they try to sell if they can sell at all. 

Company Share. When you invest in a commercial trust investment trust, you’re generally investing in a company that owns one or several different income-producing properties that are usually all in one asset class, offices, warehouses etc. Investors then share the rental income. 

Difficult To Sell. There is no share in the growth or capital gain of the property. A shareholder also must find a buyer. With no limit on supply, most shareholders are subject to the investment term and then receive their investment balance after all the management fees, property expenses, etc.

Fractional Ownership

Secure Ownership

Professional Management. Typically a company manages a fractionally owned property with several unrelated owners. The company would be responsible for construction related to the renovation of the building, property management duties and brokering an eventual sale.

Tenancy In Common. In the fractional ownership model of a tenancy-in-common and no company in charge, it might be up to one owner to handle these duties.  Thus, while tenancy-in-common might seem more casual than investing through a company, one could also say it can carry more risk. 

Affordable An NZD10 million multifamily midrise building might be affordable to a small number of institutional investors and wealthy individuals. Splitting ownership of the building into 30 portions allows many more entities to own a share. Because it’s less expensive than buying the entire property.

Follow The Sun Or The Snow. Furthermore, the majority of owners may only want to spend just a few weeks in one location.  A common approach is for four owners, particularly in retirement, is to spend three months each year in one location, with four owners following the sun or the snow.

Benefits

Shared Ownership

Secure Share. You own a safe share of the real estate itself and are issued a deed for the property. Your share of the real estate rises as the home’s value rises with the market, just like whole ownership, while enjoying the benefits of a lifestyle property at a fraction of the cost.

Affordable. ‘Fractional Ownership’ lets you get the home you want in the most desirable location at the price you can afford. An NZD4,000,000 home is out of your reach, but an NZD1,000,000 is suitable for your budget.

Tax Deductable. The investment can be GST registered as a business and the GST refunded. Depreciation, interest, tenancy and facility management costs are now tax-deductible. The house can also provide valuable rental income when not being used by the owners.

Peace Of Mind. Fractional Ownership also means sharing the burden. You can own a fractional share in several locations with interior decoration and fit-out and on-site professional management to take care of security, bookings, tenancy, cleaning and facility management, and you have assistance with selling.

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