Crisis Proof Investments

Fractional real estate, wherein an investor purchases a recreational property to fractionalize and resell at a higher value…..or purchases a fractional share of a fully furnished town house or detached house to use personally and vacation rent for a positive cash flow, has been a major hit at recreational resorts since the concept was introduced in the early 2000’s.

A typical example is the purchasing of a recreational winter home in the mountains, or a water front home in the summer. These properties, which may be purchased for $400k, then fractionalized and resold for $135k/quarter, yielding a gross profit of $140k, and a net profit of approximately $100k.

The main attractions for buyers of fractional properties are price, a share in potential appreciation, and convenience. Fractional real estate provides both a legal and use structure that makes sharing a property easy. For example in a quarter ownership, there are four owners. Each owner would get his or her own title just for his or her legal quarter interest. They can put a mortgage on it, pay their mortgage off, or sell without having to deal with other owners.
There are a number of different programs, but the bottom line is that there is a plan so that each of the owners has absolute certainty about when they can use the home.

A third-party manager is employed to maintain the property, and all the owners contribute equally to the cost of maintenance, management, a fund for future replacement of furnishings and normal repairs. In some cases, exchanges can be made at other resort locations.

For many buyers, fractional real estate is their only option if they want to buy into an expensive market. For instance, for $300,000 a buyer could own a quarter ownership of a three-bedroom luxury townhouse at Whistler, one of Canada's top ski resorts, which would be worth approximately $1 million for full ownership. Usage arrangements vary between projects, from straight forward to extremely innovative.

Generally, if you own one quarter of a property you get to use it every fourth week. Each ¼ Share gives the owner 13 weeks of use per year. The owner can either use the property or rent the property for a positive cash flow. The calendar works on a rotating basis so the major holidays are experienced by each ¼ Share owner every fourth year. If you want two or three weeks together you could see if one of the other owners wants to trade weeks. Usage for the rest of the year is based on a rotating selection process.

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Please contact me if you have interest in these types of properties.

1. Timberland Investments

2. Self Storage Facilities

3. Fractional Ownership Properties

4. REO Properties