Fractional Ownership FAQs

How does this fractional ownership model differ from other forms of shared ownership like tradition fractional ownership or timeshare ownership?

While the hassle-free ownership, full management and shared usage benefits of private fractional ownership may sound similar to timeshares and other generic fractional ownership offerings, there are some fundamental differences. Our clients enjoy the privacy of a small ownership group, typically two to five partners, creating the intimate feeling that it really is their home. Homes are selected in settings that are otherwise inaccessible to traditional fractional ownership. These small ownership groups grant our clients the flexibility other offerings are not able to provide. Private fractional ownership is a sound investment decision and allows our clients to enjoy appreciation on their property. Because of the Sponsor’s experience and expertise of purchasing real estate and structuring successful investment partnerships, this model creates tremendous value for our clients. We know that private fractional ownership is not right for everyone. Residence Clubs, fractional home ownership, and other offerings work well for many people, but for those who value, privacy, a sound investment, and the feeling of owning your own home, private fractional ownership offers the best fit.

Can I share my use time in the property with family or friends? What happens to my allotted weeks if I do not use all of them?

With a one-fifth ownership structure, each owner is allotted up to 10 weeks of personal use time. The owner can use their time themselves, or share it with family and friends. In addition all private fractional ownership properties offered by the sponsor are part of a network of hundreds of privately-owned destination properties around the world. Owners can trade unused weeks in their home in Los Cabos for time in these other properties and the sponsor handles all of the logistics. Any time not used personally by the owners is pooled together and, with management’s oversight, is rented out through luxury vacation rental agents that specialize in private home rentals in Los Cabos. The income generated from these rentals is divided proportionately between the owners, depending on the number of unused weeks individuals contributed to the pool. This income is then used to offset annual mortgage and operating expenses.

Are owners tied to the same 10 weeks each year? If not, how are the assignments made?

No, week selection is fluid, fair and flexible. For most owners, access to the home will be similar to them owning alone. Each year the owners receive a calendar on which they choose the weeks they want for the coming year. If there is overlap between the requested dates of two owners, management assists the owners to determine who may have flexibility to change dates. If both owners insist on wanting a particular time, the sponsor has a fair rotating tie-breaker system to determine who can use the property during the desired period. Unreserved weeks from the initial calendar process will go into the rental pool. Owners may always request additional weeks for themselves, friends or family, or for through Trade to Travel. Owners may also cancel their reservations.

How are decisions made concerning the maintenance of the property? How are the expenses determined?

The property is "delivered" to the owners with all the furnishings, luxuries and amenities in place. Going forward, the goal is to maintain the quality of the property, both for the owners’ enjoyment and to maintain the highest level of rental income on the property. Ongoing maintenance decisions are designed to keep standards high and costs low.

Who is the sponsor behind private fractional ownership, and how can I be sure of their experience in this market?

The Sponsor already successfully operates an extensive list of fractional ownership properties in the United States, Caribbean, Mexico, and Europe, and is constantly adding new properties to fill the demands of its clients. The sponsor is an affiliate of a Minnesota based diversified real estate development and property management firm with over thirty-five years of experience in the business. The sponsor’s parent company has developed, owned and operated more than 8700 residential housing units in the upper Midwest.

Are taxes, management, furnishing and other costs represented in the "total share price"? Are there any hidden fees?

The total share price includes all closing costs and taxes on the purchase, legal and financial costs, furnishing and renovation (if applicable), and preparing the property for the rental market. Each home is also funded with a $50,000-75000 operating reserve which is also part of the purchase and inures to the benefit of the owners. There are no additional fees or taxes for the investor.

Will I have to deal with paying Mexican taxes on the property or the rental income? What is the likely tax treatment for my share ownership in my home country?

The sponsor handles all ongoing tax payment on behalf of the partnership and its co-owners. Properties sold for a gain in Mexico are subject to Mexican capital gains tax. The US and Mexico have a tax treaty whereby Mexican taxes paid are a credit against a US taxpayer’s domestic tax obligations. Owners are advised to seek professional advice regarding all such tax issues.

Can I sell my share of property at any time? If I want to sell my share, can it be done privately, or must I sell it through you?

Each owner is fully vested for his or her share of ownership and is free to sell it privately at any time. The solvency and suitability of the new owner will be evaluated so that the previous owner can be released from all future liability for mortgage and upkeep/maintenance expenses. Existing owners will be offered the opportunity to purchase the shares that an existing co-owner is looking to sell. The sponsor does not buy the shares back from individual owners; however, through their database of interested shareholders-to-be, they are glad to assist you in locating a willing buyer.

What is the expected sell date for the property? Is this set in stone, or can a different decision be made by the owners to sell earlier or later?

Each owner should be comfortable with owning for 5-10 years, during which time the property will be sold. Being able to sell the entire home is a huge advantage the private fractional ownership model has over traditional fractional ownership. The projected sale of the property is five to ten years after the purchase. Based on market conditions, rental income or other factors, the owners may collectively decide to sell the property early, or hold the property longer. Details of any such decision-making process are spelled out clearly in the management documents.

Are the documents governing the property available for review?

All the structural and financial documents are available for your review before making any commitment to private fractional ownership. The process involves entering into a dialogue with the sponsor and signing a non-disclosure agreement.