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THE GENERAL CONCEPT OF FRACTIONAL OWNERSHIP

What is Fractional Ownership?

Fractional Ownership (Property Syndication) is a method of co-owning a single asset by more than one individual or entity – a group of investors. It is a legal entity through which a number of investors become shareholders (owners) of a leisure property (holiday home). The costs and usage of the property is shared amongst the shareholders in relation to the percentage shareholding.

The shareholders are the owners of the property, and therefore control all aspects of the property through a private company.
The company allows shareholders time periods to utilize the property by means of a shareholders’ agreement. An 8% share would allow 4 weeks usage per annum (see
“How does Fractional Ownership work?” for more information)

This investment method offers the most favourable and optimal combination of leisure lifestyle, investment, and property ownership, by offering a share in an appreciating asset at a fraction of the cost – without the burden of management and maintenance.

Note… You own 8% of the value of the total property – an appreciating asset.

THE CONCEPT OF FRACTIONAL OWNERSHIP

The Benefits of Fractional Ownership

More and more people are realizing that the best solution for owning a second property is Fractional Ownership – the benefits are endless…

• Nobody makes use of a second property or holiday home all year round. Fractional Ownership offers you the perfect solution -only pay for what you use.
• It offers more affordable ownership in exclusive leisure destinations as costs are shared. Majority of people would otherwise not be able to afford a second leisure
Property.
• You can invest in more than one leisure property in different locations at the same cost as one single property. Conventional property investment would cost 13
times more.
• Leisure destinations, because of demand, increase in value much faster than average residential properties.
• Minimal capital outlay whilst enjoying maximum benefit in different locations.
• You don’t have the sole burden and cost involved in maintaining and managing the property, as this is shared between all shareholders and taken care of by
someone else.
• You can earn rental income for your own sole benefit if weeks not utilized are rented.
• You can exchange your time slot to suit your individual needs and requirements.
• Limited security concerns as result of maximum usage and higher occupancy, and secure estates / developments.
• You can sell your share in the property at the current property market value at any time.
• You invest in property with capital growth.
• Limited surety for your portion only – not the entire value of the property.
• Own your holiday destination as opposed to renting it.

THE CONCEPT OF FRACTIONAL OWNERSHIP

Is Fractional Ownership Similar To Timeshare?

NO!

The only similarity is that more than one party is involved in the property… However the advantages of Fractional Ownership over timeshare are distinct and far more
superior.

• Timeshare buys you time – Fractional Ownership buys you an appreciating asset.
• With timeshare you never own the property or become a shareholder.
• Property value increases and so does your shares within Fractional Ownership.
• Fractional Ownership unlike timeshare is aimed at a more up-market sector.
• Timeshare decreases in value whilst Fractional Ownership accumulates capital growth.
• Fractional Ownership shares can be sold at any time – no contractual period.
• With timeshare demand is higher than supply – availability is a serious concern.
• Timeshare includes brokerage commissions of up to 60%. Fractional Ownership attracts standard sales agents’ commission of approx 7%, but like with any property transaction is paid by the seller.

THE CONCEPT OF FRACTIONAL OWNERSHIP

The concept is perhaps best demonstrated by way of example. 13 Investors each purchase 7.7% of the shares in a company which owns a leisure property worth R1.950 million, ( +-$ 280 000), for R150 000 each (+-$ 21 000), and in return, each receives 7.7% share in the property, as well as 4 weeks a year (in different periods) at an exclusive holiday destination.

Some offer a management agreement which includes marketing of the rental pool.
Your payments are held in a trust account which is managed by a firm of
Attorneys /Auditors, which have the skills and experience in Fractional
Ownership.

Upon transfer into the syndicate company, each shareholder receives
a fully tradable share certificate indicating the shareholding in the
property/company.

How Does Fractional Ownership Work?

Your investment remains exclusive in that the number of shareholders is limited to 13, or less, per property -unlike timeshare.

Shareholders are conventionally allowed 4 weeks holiday period or usage per
annum for every 7.7% (1/13th) share. These weeks are split up into various time slots (2 weeks peak and 2 weeks off-peak) and rotate on an annual basis.
Investors can however take up more than one share. No shareholder can take up more than 25% share.

Fractional ownership operates on a usage roster. A specific roster is developed for each property in advance for up to 10 years ahead. Weeks are rotated on an annual basis giving all shareholders equal opportunity. All shares therefore have equal value.

Exchanging and/or combining allocated weeks may be done at the discretion of the respective owners.

Should you prefer not to make use of your allocated weeks, you may make your time slot available into the rental pool for your own profit.

The management of the property (including rental), can be taken care of by a Property Management.

THE CONCEPT OF FRACTIONAL OWNERSHIP

Is Fractional Ownership For Me?

If you answer yes to any of the following questions, you are a candidate for Fractional Ownership.

• Are you interested in entering / investing in the property market?
• Do you want to own a second property / holiday home?
• Are you interested in diversity of your investment portfolio?
• Do you have cash available or equity in your existing bond?
• Would you prefer more choice and flexibility during your holiday?
• Are you interested in creating wealth through a leisure property?
• Do you want better returns on investment by lowering risk?
• Would you rather prefer someone else to manage your holiday home?
• Do you rather want to own your holiday home as opposed to rent it?
• Would you prefer a better lifestyle?

Only Own What You Use

FINANCIAL OVERVIEW

The Offer depends on the Developer, however, the following payment plan is common.

Payment - A cash deposit of 10% upon signature of the agreement.
Balance of the land price (or 40%) within 30 days by means of guarantee or cash payment.

6 equal monthly payments to facilitate the development of the property / secure the balance of the purchase price.

Example (Estimate)
Monthly Expenses (Levies ZAR)
Estate/Sectional Title Levy 1 605
Rates & Taxes 0
Water & Electricity 500
Insurance (Content & Structural) 500
Housekeeping / Domestic Service 900
Pool, Jacuzzi & garden Services 0
Repair & Maintenance Provision 500
Refurbishment Provision 500
DSTV (Satellite TV) 450
Accounting &Audit 700
Management Fee 1 500

Total per month ZAR 7 155
Total per shareholder per month (1/ 13) 550
All the shareholders have full access to the budget and actual spending of the company.

FINANCIAL OVERVIEW

Return on Investment (ROI) Analysis

SERVICES OFFERED

-Selection of prime investment opportunities in locations which will ensure optimal return on investment and leisure lifestyles.
-Marketing of the Fractional Ownership scheme.
-Development of each property including Project Management from acquisition of land to furnishing & decorating.
-Handling day-to-day management, administration & utilization (including rentals) of each property on behalf of shareholders.
-Storage of your personal items i.e. books, pictures & photos, dvd’s, cd’s etc.
-Facilitate resale of shares
-Acts as facilitator to ensure that shareholders do not enter into disputes or suffer negative experiences related to their

Investment.

The Complete Property Investment & Management Solution – so much more!

CONTACTS
For more information contact:
Arnold Muscat
Tel: +27 (11) 803 1115 Fax: +27 (11) 803 1115
Email: info@southafricatourismonline.com 
Website: www.southafricatourismonline.com