FRACTIONAL INVESTMENT

Transcription

1 THE RICHER RETIREMENT SPECIALISTS GUIDE TO FRACTIONAL INVESTMENT

2 FRACTIONAL OWNERSHIP IS A UNIQUE OPPORTUNITY WHERE UNCONNECTED BUYERS COLLECTIVELY AND SECURELY OWN THE FREEHOLD OF A PROPERTY REGULAR INCOME FROM - FRACTIONAL OWNERSHIP Here is a simple overview of fractional property ownership: You own a fraction of the physical property Lower financial risk - less initial outlay Allows you to spread your property portfolio You have deeded ownership, therefore the price you pay is a true reflection of the value of the property Many schemes offer both regular income and the potential for capital growth Fractional ownership When someone purchases a room or part of a property this is called fractional ownership. Like timeshares fractional ownership properties can often be used for holidays. The main difference between them is that a fractional ownership investment is focused on making a financial return, offering the potential for both capital growth and a regular income. The owner of the fractional share will receive deeds and become a part owner of the property. One example is the purchase of a hotel suite. The owner(s) of the suite will receive a share of the revenue generated by hotel guests who stay in the hotel suite. Fractional ownership property investment Originally invented as a scheme for owners of jets and yachts, fractional ownership has begun to spread to the property investment market in recent years. Fractional ownership allows you to buy a fraction of a property (or yacht or jet). This gives you rights to use the property for certain periods every year and entitles you to a share of the profits if the property is resold. Fractional ownership has been big in the US and Canada for some time, only recently beginning to get off the ground in Europe. The increase in popularity has been put down to the turmoil in the economic market. Fractional ownership allows investors to own assets with reduced risk compared to buying a property outright. As green shoots are being seen in housing markets across the world, now seems a good time to turn money into assets, but at the same time returns are still far from guaranteed. Fractional ownership seems to offer the perfect solution offering guaranteed returns for a set term with reduced risk.

3 How does fractional ownership property investment work? Fractional ownership works by selling portions of existing or new properties to different investors. This means that a property will have between four and thirteen owners, rather than just one. The properties available on a fractional ownership basis are usually luxury properties which many investors may not typically have access to. A property may, for instance, be worth 1m but sold off through fractional ownership to eight different owners for 125,000 each. Each owner has a deeded stake in the property and will be able to use it for on average four weeks each year. Fractional ownership schemes usually have a time limit. At the end of a specified period, possibly seven to ten years, the property will be sold off and the proceeds will be split between the various owners. In this way, fractional ownership can be seen as a long-term investment as profit will be made if the value of the property has increased over time. How is fractional ownership different from timeshares? Once popular in the eighties, timeshares now have a reputation that borders on being criminally bad. Timeshares were marketed to working classes as a great way to have access to a personal holiday home. There are hundreds of stories available of people being duped into purchasing timeshares in properties that were either very badly maintained, or in some cases, never even built. People found themselves trapped, unable to sell on their timeshare or make any use of it. Timeshares are seen as money traps, and fractional ownership sounds suspiciously similar. Timeshares begin to devalue the moment they are purchased and it is highly unlikely you will ever make a profit from one. They are notoriously bad as investments. Fractional ownership, on the other hand, makes investors into deeded owners. There are fewer owners and each stands to make a profit on their share as long as property values rise. There is a great deal more security and far less risk involved in fractional ownership as opposed to timeshares. The good news for investors is that timeshares are in fact quite different to fractional ownership. Timeshares involve buying only the right to use a property for a set amount of time each year, you do not actually own a share of the bricks and mortar the property is built from. Often when buying a time share, you are only able to use the property for 1 week in a year. This means that for the other 51 weeks, someone else is using the property leading to maintenance issues and very little flexibility.

4 INVESTMENTS THAT YOU CAN ENJOY YEAR AFTER YEAR. Advantages of fractional ownership Fractional Ownership You actually own a fraction of the property. You physically own a share of the freehold of the property as an asset the bricks and mortar. When you re ready to sell, you can do so at any time and with a realistic opportunity of making a profit. If you invest in a fractional ownership property, you will receive regular income from the investment, typically 6% - 12% You can often sell your share back to the hotel for an agreed price when you no longer wish to own it Most investments offer a sell at any time policy It is cheaper to own a fraction of a property than buy the whole property and you still get a share of the returns it makes It is a fully-managed investment meaning that you won t have to worry about managing or maintaining the property Timeshare VS You purchase the right to stay in a property for a given time period over a number of years (effectively a re-saleable, prepaid booking). This is completely different to fractional ownership you do not own any part of the physical property. Options for personal usage instead of receiving the income are usually available Many investments can be held in a SIPP or SSAS Financing fractional ownership property It is not possible to get a mortgage for fractional ownership, so finance for properties owned in this manner must either come from personal savings funds or through re-mortgaging an existing asset. Fractional ownership can also be an investment made via a SIPP or a SSAS. Selling fractional ownership properties Most fractional ownership schemes have a set time for resale. This can vary from seven years, right up to fifteen years. There are usually exit strategies available if you wish to sell your share in the property before this time is up. The most common option is to offer your share to the other owners and hope one of them will buy you out. Different countries and companies also have various different resale options outside of this.

5 FEATURED INVESTMENTS HISTORIC SCOTTISH CASTLE SUITES a Invest From from 30,000 to 390,000 a 7% fixed net returns for 2 years a Assured resale option of up to 150% a Historic castle with superior facilities a UK based investment a Available to all investors BOUTIQUE RESORT & SPA HOTEL a Invest From 18,000 a Up to 12% fixed net returns for 15 years a Assured resale option of up to 150% a Over 1.25 million in rental returns a UK based investment a Available to all investors CAPE VERDE 5 STAR LUXURY RESORT a Invest from 20,000 a 7% guaranteed for 4 years a 9% projected year 5 onwards a Partnership with Melia Hotels a Developer financially strong a Available to all investors Please visit our website to view our comprehensive portfolio Get in contact Gemini Business Centre Old Shoreham Rd Hove BN3 7BD United Kingdom [email protected]

6 ABOUT AVANTIS WEALTH THE COMPANY Avantis Wealth is an investment broker specialising in high income property investments. We provide our clients with investment opportunities that enable them to achieve market leading returns from their pensions, investments and savings, potentially leading to greater financial security and a better quality of life. Within our portfolio we offer a wide range of fraction ownership investment opportunities in the UK, France, Turkey and Cape Verde Islands. We target annual returns in the range of 7%-15% net p.a. with investments that meet our F.R.E.S.H. investment strategy. THE TEAM Work with Avantis Wealth and benefit from our strength of experience and understanding of property and asset backed investments. The senior management team offers over 50 years of combined experience in property and investment and are highly focused in achieving the very best from your investments. Our MD, Rod Thomas FCA has 32 years of investment experience and is the author of The Pension Disaster And How To Plan For A Secure Retirement. OUR VALUES FIND OUT MORE The relationship with you is the most important asset we have. Therefore we work hard to earn and keep your trust. These four values underpin the decisions we make and the way in which our company operates: INTEGRITY HONESTY RESPECT RESPONSIBILITY FREEPHONE: LANDLINE: [email protected] PLEASE CALL US DURING UK OFFICE HOURS DISCLAIMER Avantis Wealth Ltd is not authorised or regulated by the Financial Conduct Authority (FCA). This is not a financial promotion or an invitation to invest. Avantis Wealth Ltd does not provide any financial or investment advice. We provide a referral to a regulated advisor who will offer appropriate advice, or to the company offering an investment who will determine your suitability for the investment prior to any offer being made. We strongly recommend that you seek appropriate professional advice before entering into any contract. The value of any investments can go down as well as up and you might not get back what you put in. You may have difficulty selling any investment at a reasonable price and in some circumstances it might be difficult to sell at any price. Do not invest unless you have carefully thought about whether you can afford it and whether it is right for you and if necessary consult with a professional adviser in accordance with the Financial Services and Markets Act These products are not regulated by the FCA or covered by the Financial Services Compensation Scheme and you will not have access to the financial ombudsman service. Information is provided as a guide only, is subject to change without prior notice and doesn t constitute an offer of investment. Some investments may be restricted to persons who are high net worth, sophisticated or professional investors or who take independent advice from an authorised independent financial advisor. VERSION: FOG /02/16