What is Fractional Ownership?



How does fractional ownership work?


Depending on the fractional size of ownership you choose you will have unrestricted use of your condo for the period of time selected. The minimum size is usually 1/8th share but some may purchase 1/4th or 1/2. 1/8th share gives you usage 1 week every 8th week for a total of 6 weeks a year. The home is closed every year for 4 weeks between January and February for maintenance. If maintenance is not needed it is rented and proceeds are distributed evenly to the owners accounts based on share of ownership. Each year the calendar automatically shifts the rotation of owners. This guarantees that if one owner has Thanksgiving week one year, the next year the holiday automatically rotates to another owner and so on. The owner also is given the ability to trade weeks with the other owners. If an owner can not use all of their 6 weeks per year, it is their option to let family or friends use it, or rent it out and keep the proceeds. To protect all the owners there is a strict process for renters to insure the value of your investment.


How is ownership conveyed?

Ownership is taken in an Arizona LLC (Limited Liability Company). This allows owners to easily transfer or sell the ownership of their share in the USA without the complex process of Mexican Property transfers. The LLC is then named as the legal owner of the Mexican trust known as "fideicomisos", or through a Mexican Corporation.


Can the Mexican Government take my property from me?

No, you own 6 weeks per year FOREVER. Property problems that occurred before were based on the old 30 year land lease. At the end of 30 years if the owner did not decide to renew they could take back the property much like how the 99 year lease on Indian land here in America works. Now ownership is taken away completely from the seller and held for your benefit at a bank in a trust or ownership can be taken through a Mexican Corporation.


This sounds a lot like a time share, is it?

No, definitely not. Timeshares do not appreciate in value and much like a car decreases in value by 50% the moment you purchase it. Time shares are usually good for 1 fixed specific week per year and although you can trade weeks it is difficult to get the weeks you want. Time shares have many costs and fees that you have no control over. With fractional Ownership you are an owner and have a say in all expenses related to your property.


What are the management fees and what do they cover?
Management fees are paid for quarterly and are an all inclusive fee. This covers taxes, power, water, security, HOA fees, high speed internet, IP telephony, weekly maid service, management, accounting, Satellite TV. The fee is reviewed and approved annually by the owners.


What are the down sides to an 8-Share Vacation Home?
There is the ridged schedule, but the every 8 weeks scheduled use can be overcome by a trade with another owner, or some people buy 2 shares to be able to stay for longer periods (or more often). Another downside (or benefit) is that there is no smoking allowed inside the home. However, this allows us to maintain the home in a pristine condition from one week to the next, year after year. We view this as an advantage to the group as a whole.


Can I invest using my IRA money?

Yes, as long as you treat it like an investment. If you rent or sell then the proceeds are returned to your IRA.


What happens if one of the owners of the unit damages it?

Each week after an owner checks out the unit is inspected against an inventory sheet and all missing and damaged items are charged to the owners account. There are provisions within the LLC operating agreement that guard against most potential owner’s problems.