October 27, 2009

Imagine The Possibilities With Fractional Interest

Bkassets.com often has listings for fractional interest in an asset. You may have seen ads for 1/16 interest in land or ¼ interest in a timeshare. Fractional interest pops up fairly often and is a great investment.

What is Fractional Interest?

Fractional interest is ownership of some but not all of the rights in Real Estate and other real property. Types of fractional interest include easements or a right afforded a person to make limited use of another person’s real property and leasehold, or the condition of holding property by lease.

Fractional Interest: The Luxury Lifestyle Redefined

Fractional interest has turned into a way to live large on a small budget. At the heart of the fractional lifestyle is its unique structure. Owning coveted assets without the financial exposure whole ownership requires has made these investments immensely popular. Essentially, the value proposition is this: why pay for months of upkeep, insurance, staff and other considerations when you are only using your commodity a portion of the year?

luxury_yacht_03-300x207Fractional ownership gives you the assurance and sense of pride that comes with whole ownership by giving you a deeded interest, but partitions the responsibility among like-minded partners who share in the responsibility of maintaining valued assets such as vacation real estate, land, timeshares, jets, yachts, aircraft, and cars. And while more costly than timeshares, fractional real estate still represents true value in the luxury category, costing considerably less than sole ownership.

Adding to the appeal, many opportunities also offer exchange programs allowing you to exchange some of your time interests for other comparable fractional properties around the world. And since the world of fractionals has only gotten bigger over the last few years, that option can extend to your other fractional assets as well.

What Kinds of Real Property Can You Hold Fractional Interest in?

Fractional Jets:

Operating much like fractional real estate, fractional jets gives you an ownership share of a specific aircraft with share price based on variables such as the type of aircraft and how many shares/annual hours you require. Shares generally begin at a 1/16 fraction, which would grant 50 hours of flight-time per year. Fractional ownership usually requires a 2 to 5-year contract and an upfront commitment of share price. Exchanges for other jets are possible. A recent innovation, the 25-hour flight card, works much like a debit card. This option doesn’t provide an ownership position, but offers flexibility and minimal upfront commitment. Prices in these categories range from approximately $100,000 to well over $500,000.

Fractional Cars:

Expect to pay a one-time membership fee ranging anywhere from several hundred to thousands of dollars, as well as annual charges beginning at approximately $1,500 and topping-out at close to six figures. Rates depend on variables such as the level of membership you require, amount of time you use vehicles, and the caliber of cars the club possesses.

LamboBackground_op_800x600-300x225Fractional Yachts:

Typically, each share entitles the fractional yacht owner to a percentage of use per year – indefinitely or for a defined period of time. For example, each 10 percent share receives four (4) weeks of yearly use. Share prices vary as widely as program particulars, depending on the size of the yacht and number of fractions, but a good barometer is the $70,000 to $250,000 range. To vary cruising grounds and seasons, a rotating calendar schedule is often used, such as two weeks in the summer and two weeks in the winter. Any remaining time not used by owners is allocated for shipyard maintenance, transportation, and time off for the crew. Interests in a fractional yacht can be sold like traditional property or exchanged for other fractional ownerships, such as a luxury vacation home or fractional jets.

Keep checking our auctions for fractional interest listings. The sky is the limit on these investments!

References: www.fractionalcollection.com