Shared Ownership - A Good Idea?
Discussion
Posted in 2 Parts: Part 1
I have been contemplating/developing a new business venture for some time now and thought I would share a brief overview of the concept with you PH'ers (due to the high levels of savvy on here) for thoughts and feedback regarding its potential, flaws, etc.
If the feedback is positive, I will progress the concept beyond its current stage (lots of the pieces are complete). Anyone interested in developments of the project as they happen, please feel free to email me. Thanks for reading.
The general principle is to provide Co-Ownership (Shared or Fractional Ownership) brokerage services and full asset management for people who want to acquire holiday home(s) / investment property abroad, with reduced capital outlay and reduced financial risk but with the same ownership benefits offered by individual ownership.
Co-ownership is where multiple parties (2 or more) enter into an agreement to collectively purchase a property (the asset), which will be shared both equitably and in usage entitlement, based on the fraction of the asset acquired by each party. Typically, co-owned assets are purchased based on an equal equity fractional term:
1/2 Ownership – 2 Equal Equity Owners
1/3 Ownership – 3 Equal Equity Owners
1/4 Ownership – 4 Equal Equity Owners
etc..
I have been contemplating/developing a new business venture for some time now and thought I would share a brief overview of the concept with you PH'ers (due to the high levels of savvy on here) for thoughts and feedback regarding its potential, flaws, etc.
If the feedback is positive, I will progress the concept beyond its current stage (lots of the pieces are complete). Anyone interested in developments of the project as they happen, please feel free to email me. Thanks for reading.
The general principle is to provide Co-Ownership (Shared or Fractional Ownership) brokerage services and full asset management for people who want to acquire holiday home(s) / investment property abroad, with reduced capital outlay and reduced financial risk but with the same ownership benefits offered by individual ownership.
Co-ownership is where multiple parties (2 or more) enter into an agreement to collectively purchase a property (the asset), which will be shared both equitably and in usage entitlement, based on the fraction of the asset acquired by each party. Typically, co-owned assets are purchased based on an equal equity fractional term:
1/2 Ownership – 2 Equal Equity Owners
1/3 Ownership – 3 Equal Equity Owners
1/4 Ownership – 4 Equal Equity Owners
etc..
Posted in 2 Parts: Part 2
However, there are a number of permeations, which can be implemented to create the appropriate equitable and usage share of the property, based on the investment made by each of the parties:
1 party might purchase 4/8th Ownership and 4 other parties might purchase 1/8th Ownership each.
The 4/8th Owner would be entitled to exactly 1/2 of the total usage and equitable value of the asset as well as 1/2 of the profit from any rental income generated from the property.
Unlike Timesharing, Co-ownership offers an equitable ownership of the asset rather than simply a time based usage entitlement of the asset. Therefore, when a party sells their share in the property they will receive a proportionate financial return on the sale of their share, as they would if they were the outright owner of the property.
The services which would be provided include:
1.Identify and introduce potential co-owners.
2.Oversee the legal administration and preparation of the ready to execute Co-ownership Agreement.
3.Help identify & locate the Asset to be acquired by the Co-owners.
4.Oversee the execution of the Co-ownership Agreement by all parties.
5.Provide a fully managed diary system for the Co-Owners to co-ordinate their usage of the property.
6.Provide a fully managed promotional, vetting and online booking management system for lettings to holiday renters.
7.Oversee sale of a Co-Owners share at the current market.
However, there are a number of permeations, which can be implemented to create the appropriate equitable and usage share of the property, based on the investment made by each of the parties:
1 party might purchase 4/8th Ownership and 4 other parties might purchase 1/8th Ownership each.
The 4/8th Owner would be entitled to exactly 1/2 of the total usage and equitable value of the asset as well as 1/2 of the profit from any rental income generated from the property.
Unlike Timesharing, Co-ownership offers an equitable ownership of the asset rather than simply a time based usage entitlement of the asset. Therefore, when a party sells their share in the property they will receive a proportionate financial return on the sale of their share, as they would if they were the outright owner of the property.
The services which would be provided include:
1.Identify and introduce potential co-owners.
2.Oversee the legal administration and preparation of the ready to execute Co-ownership Agreement.
3.Help identify & locate the Asset to be acquired by the Co-owners.
4.Oversee the execution of the Co-ownership Agreement by all parties.
5.Provide a fully managed diary system for the Co-Owners to co-ordinate their usage of the property.
6.Provide a fully managed promotional, vetting and online booking management system for lettings to holiday renters.
7.Oversee sale of a Co-Owners share at the current market.
tonker,
Interesting comments. Much appreciated. Thanks.
The idea came about because I personally am keen on the idea of owning properties across the globe that I can go and stay in, generate a rental income from and that will appreciate in value over the term of ownership.
Timeshare is a no no for me as it won't make me money. Co-Ownership will make money all the time the properties are being rented and the Euro-market for holiday property continues in a positive direction over the long-term.
Interesting comments. Much appreciated. Thanks.
The idea came about because I personally am keen on the idea of owning properties across the globe that I can go and stay in, generate a rental income from and that will appreciate in value over the term of ownership.
Timeshare is a no no for me as it won't make me money. Co-Ownership will make money all the time the properties are being rented and the Euro-market for holiday property continues in a positive direction over the long-term.
Without wishing to change the subject (which would be stupid as I started it), I am also looking at creating an environment for genuine UK entreprenueurs and wannabe entrepreneurs to meet and chat about projects, opportunities, idea's etc.
As such a person, it drives me mad when I have no-one to bounce idea's off.
Thing is it would have to be a members only area to stop all the dross and so called "Internet Opportunity" scammers destroying its integrity.
Thoughts?
As such a person, it drives me mad when I have no-one to bounce idea's off.
Thing is it would have to be a members only area to stop all the dross and so called "Internet Opportunity" scammers destroying its integrity.
Thoughts?
avanti911 said:
Without wishing to change the subject (which would be stupid as I started it), I am also looking at creating an environment for genuine UK entreprenueurs and wannabe entrepreneurs to meet and chat about projects, opportunities, idea's etc.
As such a person, it drives me mad when I have no-one to bounce idea's off.
Thing is it would have to be a members only area to stop all the dross and so called "Internet Opportunity" scammers destroying its integrity.
Thoughts?
Are you thinking cyber or real?
What would you do in the event that some of the owners / shareholders wanted to use the place as the same time as another member?
It could create problems there, but a shared investment means shared returns and shared risk of course.
Probably, those that can, might prefer to buy a property outright themselves and market it on the net.
It could create problems there, but a shared investment means shared returns and shared risk of course.
Probably, those that can, might prefer to buy a property outright themselves and market it on the net.
You will need to take care in how you market the concept to avoid the comparisons to timeshare (and associated negativity). For example, your opening gambit should NOT be “this is nothing like timeshare”. Probably best to sell it as a financial opportunity with added value (of a holiday home abroad). “An exciting alternative to a pension” perhaps.
Timing may be an issue. You can go pretty much anywhere in the world at the moment for next to nothing so the prospect of investing into something that (on the face of it) will tie an individual to one place may not be that appealing.
Timing may be an issue. You can go pretty much anywhere in the world at the moment for next to nothing so the prospect of investing into something that (on the face of it) will tie an individual to one place may not be that appealing.
Co-ownership and (more recently) fractional ownership are familiar to aircraft owners. I have been the treasurer of a flying group in the past and currently own a 1/5 share in a plane. I also know people who have co-owned luxury cars.
Two basic problems with co-ownership
1) determining what level of agreement is required for major expenditures - some co-owners will want to spend the least possible, others will want to maintain and equip their assets to the highest possible standards (avionics are expensive...)
2) under UK law, if any 1 co-owner wishes to realize the value of the asset, they may be able to force a sale
I have seen fractional ownership working in the US, where owners buy membership "levels" entitling them to different levels of usage (hours per month, weekends vs weekdays, etc). I don't know how well this works under UK laws.
hope thise helps
Two basic problems with co-ownership
1) determining what level of agreement is required for major expenditures - some co-owners will want to spend the least possible, others will want to maintain and equip their assets to the highest possible standards (avionics are expensive...)
2) under UK law, if any 1 co-owner wishes to realize the value of the asset, they may be able to force a sale
I have seen fractional ownership working in the US, where owners buy membership "levels" entitling them to different levels of usage (hours per month, weekends vs weekdays, etc). I don't know how well this works under UK laws.
hope thise helps
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