'The Tides' Fractions vs Traditional Fractions vs Whole Ownership

 

The Tides, Hermanus

Traditional Fractions

Fully Owned Holiday Home

Type of Ownership:

The purchaser is buying a piece of property with a Title Deed.

The purchaser is buying shares in a company and is bound by the Articles of Association and The Companies Act.

Comes with a Title Deed

Re-sales:

Tides fractions are freely sellable. This is done as a standard property transaction.

The owner is contractually bound to various rules and regulations governing the sale of the shares.

Freely sellable as a standard property transaction

Rentals:

All four weeks go into the Hotel rental pool and each owner gets paid out his share on a quarterly basis. This is averaged every quarter and all owners will receive an equal share.

Some developments assist with renting out units. Many leave it up to the owner to rent his unit out and collect the rental. If his weeks fall into an off season he may end up with no rental.

Up to the owner, although the best times to rent normally clash with times the owner wants to be there. Management companies charge high fees, eating into rentals received.

Usage:

Having received his four week share of the rental pool, the owner can decide if he wants to spend some of the rental on a visit to The Tides. He can do this with prior booking at any time of the year, at the owners discounted rate. The discounted rate means the cost will be approximately on a one for one basis. ie if he visits The Tides for a week it will cost him roughly one week’s rental income.  Visits are totally flexible and can vary from 1 day to 4 weeks and can be split into multiple visits.

Usage is by strict rotational roster which dictates when he can use his weeks. Usage is normally in full week blocks. (If an owner wants to have a long weekend it can end up costing him two weeks.)

Up to the owner, unless its been rented out. Interestingly, average usage times are only 17 days per year. In many cases the first couple of days of his holiday are wasted by the owner having to deal with maintenance issues.

Levies:

Low Levies  The levy is for a four week fraction. The price per week compares very favourably with time share  or other fractional offerings.

Levies can be very expensive

All housing estate levies and municipal rates are fully  applicable. In most cases electricity and water supplies carry an availability fee even when no consumption is taking place.

Rental Returns:

Excellent Rental Returns due to this being an Inernational Destination managed by a Top Hotel operator. All rooms are automatically marketed by the Hotel Operator.

 

Returns can be erratic due to no central letting poit. Owners are often left to their own devices to source tenants for time that they cannot use themselves.

Returns are simply based on time rented out. Owners have to furnish their property for their own use and that of their tenants. This all has to be maintained and the costs involved further reduce actual returns. “No income” potential is high in off seasons.

Capital Growth

The direct ownership by Title Deed model combined with such a prime location will ensure excellent growth.

A good location will help achieve good growth but share sale restrictions and inflexible usage will hamper resale values.

A good location will help achieve good growth but the very high costs of acquisition and ownership limit the size of the buyer pool.

Summary :

Flexible usage, hassle free ownership, hassle free rentals, excellent Rental income and Capital growth of the highest order.

Inflexible rotating usage, possible rental hassles, Good growth.

Flexible to use but very expensive to buy, run and maintain. Loads of extra hassles and costs: rates, levies, electricity, water, insurance, security, maintenance, upkeep of furnishings (especially if rented out), possible garden maintenance etc etc.

About Fractions in General

 

There is a wealth of information about fractional title ownership on the Web, but please bear in mind that most of it doesn’t offer all the benefits of The Tides model.

 

10 years ago no one had heard of Fractional Ownership in the US. In 2006 this type of property investment grew by 32% over 2005 to sales of $1.5 billion. Furthermore, in certain prime locations such as Aspen, Colorado (A mountain ski resort where Fractional Ownership began) the capital appreciation for Fractionals is higher than fully owned property.

 

Will the rest of the world follow this trand? Indications from clients and enquirers confirm that this method of shared ownership will ultimately be the death knell of the “timeshare” market, as smart buyers would rather have a deeded investment in bricks and mortar, rather than in time.

 

With the current worldwide economic situation challenging disposable income and lending, Fractional Ownership offers the ability to own part of a property that may otherwise have been out of financial reach.

 

Fractional owners enjoy a share of a luxury property and just pay for a single fraction, or multiple fractions for longer stays. As the average time spent in a second home is only around 17 days, Fractional Ownership becomes a very viable and attractive alternative to buying a complete holiday home.

 

Fractional Owners can create international property portfolios: a place to relax and watch the whales, a home on the beach, one on the ski slopes and another in a favorite mountain resort.

 

The Tides unique fractional structure compares very favourably with traditional fractions and total ownership