Fractional ownership - where's the catch ?

pcygan

Hello all.


I have been looking at some options for buying / investing in property abroad and have come across a package for fractional ownership of a property, with the following terms :


Fractional ownership - 1/13th share of a £273,000 property = £21,000 plus completion/furnishing costs of £3,000.

200% buyback on year 10, with a rental return in the years before that. Running costs covered if only 2 weeks a year used.

We fully manage your property for you. You own a tangible asset which can be sold at any time.


What am I missing here ? The company seems quite established, but there is no way I can see that they can offer the above and made a decent profit themselves. I guess that I'm looking for the 'catch'.


Does anybody have any experience of similar schemes ?


Thanks in advance.

bigadaj

So it's effectively a timeshare with the benefits and drawbacks that entails.

If you post the company name and or a brochure link then we can possibly comment further.

Normal caveats about buying property abroad would exist, need independent legal advice in teh country, whose valuation is it, what's the company history etc

atush

Timeshares, I know people who have bought them, and then could not sell them years later. I also know that I pay less per night to stay i one, then people who own are charged in annual fees per week membership. Not to mention the loss of interest or investment growth ont he capital sum.

Guarantees are generally not worth the paper they are written on.

It is a no brainer, avoid.

PeacefulWaters

200% buyback on year 10

Who will buy back?

What if they're not trading anymore?

dryhat

The people running this scheme are very likely to be liars and thieves.

Avoid.

pcygan

Thanks for the replies.


I thought that fractional ownership was a better option than timeshare, as you actually have some ownership of the property.


As far as I could see, the two weeks use is included at no extra charge, so it was a good combination of investment and holiday.


It is the company running the scheme that buy back your share in 10yrs time, so hoping they are still about after all that time is a big risk.


The company seem fairly stable and well established, but I just can't see how they can offer double your money in just 10yrs.


Also, if the 12 other share owners are taking 2/4 weeks holiday from the property a year, that doesn't leave much time for the property to be rented out and generating income.

LeafGreen

the old maxim "if it seems to good to be true, it probably is" jumps to mind here.

jimjames

pcygan wrote: »

Thanks for the replies.
The company seem fairly stable and well established, but I just can't see how they can offer double your money in just 10yrs.

Easy. They can't!

In 10 years time it is too late to turn back and they've already taken your money.

ChesterDog

Maybe they really can double your money in ten years. How nice for them...

Catherine_Taylor

Please refer to the European Timeshare Directive. It is against the regulations of the Directive for any timeshare product to be sold and promoted as an 'investment' because once you have bought it there is no guarantee that it will sell, and make a profit. You are not buying a freehold property here, you are buying blocks of timeshare weeks. You only need to look on Ebay to see what resale weeks are worth, or call any reputable resale agent to see what the resale market is like.

Although the current economic climate has impacted the resale market considerably, how many younger people do you know who want to buy timeshare? There has been a social change, the younger generation knows that they can rent apartments in timeshare resorts for less than the annual maintenance fees, and forums are full of people who have been ripped off by resorts, resale agents and suchlike.

Please think very carefully before you make a decision.

robatwork

Let us see the small print in reference to:
200% buyback on year 10