Fractional Ownership

Fractional Ownership


AsterPPTToysIt's simple really. A fully-furnished, (fully deeded) beautifully decorated condominium could be yours during scheduled rotating time periods each year. Imagine hassle-free, low shared costs, with all the priviliges of full ownership. Plus, we have unique financing options ready for you with a low-cost unsecured line of credit with Bank of Montreal. This means NO mortgage. Payout at any time. And interest only payments on a monthly basis. Yes, really!.

The facts about fractional ownership:

History
The term fractional ownership originally became popular for business jets. Richard Santulli of NetJets pioneered the concept of allowing  businesses to purchase shares in a jet to reduce costs. With a fractional jet plan, members will typically fly in any jet available, not necessarily the one in which they own shares. The management company will reposition jets as necessary and provide flight crews. Companies with greater needs purchase larger shares to get access to more time. The fractional-ownership concept has since been extended to smaller aircraft and has now become common for single-engine piston aircraft like the Cirrus SR22, which are beyond the financial means of many private pilots. The same concepts apply, except that the management company may not provide flight crews nor reposition the aircraft.

Many pilots get together to buy light aircraft in a privately bought and managed fractional ownership, this is often known as group flying.
Fractional ownership has played a significant role in revitalizing the general aviation manufacturing industry since the late 1990s, and most manufacturers actively support fractional ownership programs.

Fractional Property Ownership
05 NSTourism 04924Fractional ownership simply means:
The division of any asset into portions or shares. If the "asset" is a property, the title or deed can be legally divided into shares.
In certain instances this is done by creating a "mezzanine structure", i.e. creating a company which owns the property then allowing multiple owners or investors to own shares in the company. Those shares can then be purchased and owned by more than one individual. The reasons for a "mezzanine structure" can vary:

  1. to allow transfer of shares without the need to reflect changes on the title or deed to the property
  2. tax benefits

Shared ownership of the property and its deed will also entitle shareholders to certain usage rights, usually in the form of weeks. Real Estate Property

Fractional Ownership Vacation Properties

05 NSTourism 08110The practice of joining together with family and friends to share ownership of vacation property has been around for many years. But the fractional property industry started in the US in the Rocky Mountains ski resorts in the early 1990s. These first fractional developments recognized that people did not want to buy whole homes, which they would only use for a few weeks a year in the mountains. According to research firm Ragatz Associates there were over 250 fractional developments in North America in 2006, and fractional properties can now be found throughout the world.

Outside the USA a non-commercial form of fractional ownership has been in existence for several decades. In this form, otherwise  unconnected individuals (rather than family or friends) form private syndicates to purchase, for example, vacation property or boats. These syndicates operate as private member groups with small numbers on a non-profit basis, generally just sharing expenses and usage. These groups can involve assets ranging from modest apartments or condominium type properties to multi-million euro / dollar properties, and leverage their ability to make collective purchases of additional assets such as boats or vehicles as additional facilities, while retaining control entirely within the membership of the group.

The popularity of the term fractional ownership has caused extensive rebranding in other industries where similar concepts, such as real estate timeshares, were already well established.

Fractional ownership divides a property into more affordable segments for individuals and also matches an individual's ownership time to their actual usage time. A fractional share gives the owners certain privileges, such as a number of days or weeks when they can use the property. Occasionally, the property is sold after a pre-determined time, distributing the relative proceeds back to the owners. A few private owner-groups have developed usage allocation schemes that suit the group.

Private Residence Clubs

ModelCloseupLivingPrivate residence clubs are the luxury, high end of the fractional property market. They provide the services and amenities of five star  hotels, and some of the luxury hotel groups run their own Private Residence Clubs. Occasionally membership in a Private Residence Club grants to its members only, the right to use the club properties and services, without ownership rights in the properties themselves. Note a private residence club is different from a Destination Club, although the terms are sometimes used interchangeably.
In addition to luxury Private Residence Clubs, single "stand-alone" vacation homes and condos can be converted into fractional ownership. This fractional home conversion process can be accomplished by any knowledgeable seller or through a fractional consulting company. The benefit of fractional home conversion includes the ability of the home owner to keep a portion of the ownership for themselves, pay off debt and reduce expenses.

A key aspect for any fractional owner is to understand their usage rights and the reservation plans. These vary from property to property. Some offer fixed occupancy periods in which an owner uses the same time each year. Some offer "floating" periods, in which the  occupancy times rotate throughout the year and some offer a mixture of these, with some time fixed and some floating.

  • Fractional group for one Fourplex unit.
  • Ten owners share 52 weeks of the year.
  • Benefits of Fractional Ownership
  • Benefits: shared purchase cost, shared expenses.

Investing in a shared fraction of a property provides owners the opportunity to own a portion of a luxury property at a shared cost. The purchase price, taxes and maintenance of the property is then shared between the owners.

REDUCED COSTS:
Maintenance fees, management fees, taxes and other fixed costs are shared by fractional owners. These fees are paid to a not-for-profit association that draws from the fees to ensure the property is maintained well and promptly. This system is full transparent and accountable to owners also drastically reducing the financial burden and responsibility often associated with owning a second home.

LESS COMMITMENT:
Fractional ownership gives owners' the ability to:

  • Experience a second home in a prime location without any burden,
  • Commit to a fraction of the purchase price, running costs and responsibilities
  • Use the equity from their property to travel more and/or to diversify their in investment portfolio.

Benefits of Fractional Ownership (cont.)

LESS HASSLE:

Professional management companies maintain the marketing and the operation of the property that allows for:

  • An immediate source of rental income while increasing the overall real estate value.
  • Carefree ownership of second home
  • When you arrive, everything is ready and in perfect working order.
  • Carefree maintenance – when something needs to be replaced or fixed it is taken care of - replacement of furniture, painting units, etc.

INVESTMENT:
Due to the fact that fractional buyers own a share of the "bricks and mortar", they are able to benefit from any increase in the property's value since they own title to the property.

Being a real estate investment re-selling your property can be offered in-house or by a certified real estate agent.

EASY ENTRY:

With prices in the domestic property market at an all time high, Fractional gives buyers the ability to get on the International property ladder at a much lower cost. The buyer can still experience capital growth and all the other lifestyle benefits associated with whole ownership of a property overseas.

"Interval International" Vacation Property Exchange

Interval International are pioneers and innovators in serving the vacation ownership market for 33 years. They are the leading global provider of property exchange membership and leisure services to the vacation industry.

  • altHas a network of 2500 resorts in more than 75 countries with about 2 million member families.
  • All members must meet Intervals criteria for quality
  • Cape Breton Lifestyles have built to II standards
  • Minimal membership and exchange fees
  • On line Interval International resort search. Make your vacation plans on-line.
  • Interval International charges a nominal fee for every transaction made through them. Interval International has member resorts on every continent except Antarctica.
  • Interval is best known for its affiliations with Marriott Vacation Club International, Four Seasons Residence Club, Starwood Vacation Club, and Westgate Resorts.

Voluntary Rental Program

Enhanced Benefit of purchase to supplement your lifestyle when your not there.

Earn money while you're not there. This voluntary program allows the owner to earn revenue from unused weekly inventory in partnership with Cape Breton Resorts. This is a revenue split agreement in favour of the home owner. You'll also get benefits of Cape Breton Resorts Marketing, Reservations and Housekeeping.

  • Managed by Cape Breton Resorts
  • Weekly Rentals - inventory is provided by owner
  • 70/30 revenue split in favor of owner
  • Housekeeping Service is provided at a nominal fee
  • Benefits of CBR marketing and or one can rent on your own

Flexible Financing

"Fractional Financing with the Bank of Montreal"

altBMO has designed a 100% unsecured financing arrangement exclusively for Cape Breton Lifestyles Fractional ownership with guaranteed terms and aggressive rates.

Customer Benefits with a "Personal Line of Credit"

  • Financing plan extends the ability to prepay or pay in full your line of credit at any time without prepayment interest penalty.
  • You will have the option to chose to make low interest only monthly payments.
  • BMO will provide a variable interest rate at an increment to the BMO prime rate. ( Low cost financing!)
  • BMO will communicate via a detailed monthly statement outlying payment requirements and balance details.

Contact:
Gary Cooper
BMO Bank of Montreal
Manager Investment Lending
902-421-3487
902-456-1056 cell number
902-421-3747 fax number
1-877-741-8139 Toll free fax number



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