People often ask me whether they should fractionalise a property they are selling or not? My response depends upon whether this is a small commercial developer or a private individual.
For small commercial developers with a fairly small number or properties, say less than ten, I usually advise them to speak to consultants who specialise in this area. There are several and I have no experience of any of them, so I cannot comment on them at all. It may also help to contact other established small fractional ownership developments for pointers about consultants.
For a commercial fractional scheme to succeed, the fractionalisation must be suitable for the market in which you want to sell your properties. By fractionalisation, I mean the size and pricing of the shares and the model for allocating time. Successful schemes incorporate ongoing ownership, lettings and maintenance management so there has to be a permanent management team in place. Plus there is the legal and financial set up. This costs a considerable amount of money upfront.
The upside is that if you can sell for a good margin above the value of the property without splitting it into shares, then there is good money to be made. There are a stack of other factors specific to the development and developer that also need to be considered, many of which are the same as marketing the properties for sale as a whole.
Fractionalisation for private individuals is completely different. If they own a property which they find they don’t use enough, and they either don’t wish to holiday let, or are not making enough from lettings to justify the hassle of lettings (a common problem), then selling part of the property may be the perfect option and this is exactly what yours2share was designed for. They can sell one share at a time, (on the basis that further shares will be sold), getting to know each new sharer well before committing to the sale and moving onto the next. Selling two third or three quarter shares may take a year or two to find the right partners and then complete the sales, but this may be preferable to selling a holiday home they love simply because they can’t justify its costs.
Private individuals who think they can sell ten or twelve shares in a property they can’t sell anyway and walk away at the end having made a fast buck are an entirely different case. I try hard to discourage them. Marketing costs and effort are much higher: you have to find ten buyers not one. Professional management and maintenance must be put in place. These simple facts discourage nearly everyone as most are decent people are just trying to see how to maximise the return on their asset.
hola dear amigos
i am writing you from costa rica to ask for help in designing a sales plan for my retreat center on the beach.
the center has 5 simple rooms and 6 apartment like rooms.
the total property value is about $850.000
could you assist me in creating a model that would be a win win situation for me as seller and for the fractional owners on the other hand.
thank you for your time
patrick schindler
Hi Patrick
Thanks for getting in touch. I’ve emailed you separately with some options.
yours2share provides a meeting place for people to meet like-minded partners for private fractional ownership, and enables people to advertise shares for sale, both privately and commercially. We are not involved in the actual contracts or management of fractional schemes.
For private individuals we have extensive guidance on setting up a sharing arrangement: http://www.yours2share.com/fractional-info/fractional-ownership-and-rent-1.shtml
Plus template contracts: http://www.yours2share.com/fractional-info/legal.shtml
If you do go ahead and sell shares in your center, do come back and place an ad with yours2share, you can post one ad free of charge.
Kind regards
Sophie
Hello. I read your comment above about ads with yours2share; can you please tell me what the process to place an ad is? Also, I want to find a way to “poll” people who are interested in fractional ownership and have given the subject some thought, on how important some features of fractional ownership may be for them (e.g. amenities-heavy property like pools, golf courses and the like (which result in high maintenance fees) versus relying on nature and culture as the main amenities (and have low maintenance fees), is one of the topics). With your experience, may be you can tell me if there is a blog or other resource you could recommend? I am very interested in the opinion of people who are knowledgeable on the subject, so needless to say I would gladly have a discussion with anyone you could suggest (and is willing to help). Thank you in advance for your time and effort. Chris.
Hi Chris
To post an ad simply go to the main site http://www.yours2share.com/ and click register. Once you’ve validated your account, login and post an ad.
Most fractional developments are at the luxury end of the market, with every amenity and service one could want. In the main I think this is because this enables the developer/manager of the properties to maximise the revenues from these and also charge the maximum cost for each share. People looking for private syndicates are often more interested in the cultural/natural aspects and are unwilling to pay for the services they aren’t interested in, and that’s if they could even find a fractional share available in the type of property/location that they want.
I’ve replied to you separately with my contact details if you want to get in touch. The two other websites you should look at are:
http://www.fractionallife.com
http://luxuryfractionalguide.com/
Sophie