FAQ's
What is Fractional Ownership?
Fractional Ownership is another word for shared ownership or when a group of people collectively own shares of an asset within a syndication. Fractional Ownership of lifestyle assets, while reasonably new in NZ / AUS, has been happening internationally for 30+ years. AssetShare systems and entity structures means you get all the upside of a syndication, but none of the down side that can occur in privately formed syndications.
What are the benefits of Fractional Ownership or Syndication?
The vast majority of solely owned boats, caravans, campervans and even holiday homes are used for well under 30 days per year. However, the owner is going to wear 100% for the initial purchase, the ongoing repairs & maintenance, as well as any depreciation. To us that just doesn't make any sense to us.
Syndication or fractional ownership of such assets, allows you to own an asset at a percentage that is relevant to the time you are actually wanting to use the asset. Financially, it is vastly more logical and it gives you hugely more bang for your buck. Say you are comfortable investing 200k into a vessel outright. If you only intend to spend 20-30 days aboard each year, would it not be much more logical to spend 20k for the same benefit? Or go nuts and chuck 200k into a 10% stake of a 2M dollar vessel? The same investment, the same use period, but a considerable upgrade vessel wise!
What are the down sides of Syndication?
The only real downside within an AssetShare syndication, is not having completely unrestricted access to the use of the asset whenever you want to use it. Use management systems in each syndication are structured differently, but most will have some element of pre booking blocks of time (generally seasonal or 6 monthly). This is done in a manner that gives all owners equal opportunity for high demand periods of time. Some preplanning is required to make use of this aspect. However, all syndications will have a balance of days available after primary selection. This means you can tack more time onto your selected period, or use the asset at any other time, even at short notice.
Everyone has a story about troubles in a private syndications. It can be a minefield! Different owners standards (cleanliness, maintenance, etc), unsuitable assets for syndication, disagreements on use, dodgy legal structure, insurance issues, damage, bad communication, fights between owners, etc, etc!
AssetShare's primary role in developing a syndicate is appropriate asset selection and the development of systems and structures that eliminate these type of challenges. This approach means everyone's expectation are managed from the outset.
How much use do I get?
Each syndicate is different, so please refer to each listing individually for specific details. However, most syndications allow for one primary selection block of time per season (generally 6 months) that is required to be booked in advance. These two periods might make up 60% of a shareholders allocated days. Once primary selections are completed, an owner can book any other time periods in advance or at short notice using the remainder of their allocated days. For example in a 1/6th share, you may select an 18 day block in Summer, and a 10 days block in Winter. The remaining 28 days can be used anytime throughout the year. You may choose to extend you prebooked block, or book at short notice if there is a vacancy.
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The selection of each Pre-selected block is handled to ensure every owner gets equal opportunity to their desired period. Each owner receives a rank on when the enter into the syndicate from 1-10 or 1-6, etc. This rank determines the order in which they get to pick their Pre-selection, and then the order is altered for each subsequent round of selections.
What are the annual costs?
This is variable on the type of asset you are purchasing, so please view the individual listings. The annual costs within the listings are an estimate, however from experience they are on the very conservative end. They include scheduled maintenance, insurance (asset and directors liability), repairs, relocations, and a contribution to a contingency fund. The purchase price also includes the first 12 months of expenses to the contingency / kitty fund.
What costs am I liable for when I use the Asset?
You are only liable for the consumables you use such as fuel and LPG. In most cases there is no other charge, however in the case that fuel isn't available all the time (or not required due to large tanks) an hour charge may be put in place by shareholders. Some higher end asset syndicates may also choose have the asset cleaned and laundered at the end of each use, in which case the cost will be passed on to the appropriate owner (at pre agreed rates).
How is the Asset Managed?
Once the syndication is formed and the asset is within the entity, the owners ultimately decide what assistance (if any) they require from AssetShare. At the very least, this normally includes use of AssetShare's online booking system and basic accounting. It can also include the management of repairs and maintenance, warrants / rego, post use cleaning / checking, berthage, asset relocations, safety equipment audits / replacements, and storage.
Do I actually own the Asset?
Absolutely! AssetShare Syndications are 100% asset ownership. Each owner owns their relevant percentage of shares in an entity that is controlled solely by them. The entity owns the asset, all chattels, the insurance policy, and the bank account.
Can I sell my share?
Yes. You are more than welcome to sell your share at any time via AssetShare or any other platform you choose. The sale process is very simple as it is a simply a share transaction. There is generally very high demand for shares in existing syndicates and these are often more valuable than the original share purchase.
Is there an end date when the whole asset is sold?
Yes. The term for each asset syndication can vary, but is usually between 3 and 5 years. At the end of the term, the asset will be sold, the entity wound down and all remaining funds distributed back to the owners. This is primarily in place to ensure depreciation is minimized or even removed. It also allows owners to try new assets and locations.
How much depreciation would I expect?
The easiest way to answer this, is to say that any depreciation that occurs will be a heck of a look less than if you owned the whole asset! Most boats and vehicles do depreciate over time, however at AssetShare we do a number of things to reduce or remove the effect. Firstly we buy well. We don't buy brand new assets, due to the sharp depreciation curve. 3-6 years old is ideal in most cases, once depreciation has slowed. We also focus on quality and assets that have been very well maintained or had light use. Secondly, the very nature of shared ownership means that assets continue to be very well maintained and upgraded throughout their syndication, which insures value is retained. And finally, we set a term for the end of the syndication period, which is determined with value retention in mind. So as economics and markets change, we can't put an estimate on what level of depreciation you should expect, other than to state that in our experience we've seen minimal (we've actually seen increases in value too).
Is finance available?
No. The majority of people that don't have the cash in hand are using equity from other assets to raise funds.
How does AssetShare make money?
AssetShare charges a flat fee of 3.5% of all syndicate share investments it facilitates. For the management of syndications we charge a modest monthly fee (approx. $25 per user) for software and a competitive hourly rate for the provision of administrative services.
Fire away if you have any further questions: hello@assetshare.co.nz
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