don't under stand about share owning a house

[azfish]

I been looking at the homes for sale in RP on the beach, some are for sale but you only get a 1/8 or a 1/10 share and some read you have a 2 week share.
For $18,000 and up I would figure you would get more for your buck than that.

What is your take on this? Am I missing something here?

 

[HAPPY]

~ ~ ~ Two words my friend, ```KEEP AWAY ```~ ~ ~ a time share of the WORST kind ! ! ! ``` I shouldn't even dignify it by calling it a time share,

```This is a ``` DESPERATION MOVE ! ! ! ``` SUCKER BAIT ! ! ! on the part of the seller or his, her, represenatives

```when things are not selling, or is a SHIT project to begin with, or has turned into one, & RP is SATURATED ! ! ! with them ! ! ! ```however rite now things, ```PIGEON COOPS```etc, are in the toilet in RP, ```1/8 - 1/10 ```BIG ! ! ! red lite

``` I'll give you some GOOD advice, NO, NO, NO, ```if you can't buy it out rite by yourself, ```don't get yourself into a CAN OF WORMS like that ! ! ! can you imagine 8 - 10 diff. owners fighting for the prime times, ```

```Actually $18,000.00 looks real good to the unsuspecting buyer, till you start taking the``` "DEAL"``` apart, & that is the ```HOOK ``` that is the intent, from there, once the ```SUCKER```is nibbling at the``` "SQUID" ```
you will feel the``` "drag"``` start to tighten up, (the stakes are raised, more ``` "BAIT"``` is then added )```or if the ```BAITER" ```is a real ```TRICK SHOT" ```you won't feel a thing, till the``` "HOOK"``` is``` "SET"```

```BTW, I like that shoot em down girl on other thread, ~ ~ ~

 

[Jim]

In this very rare occasion, I agree, cough... sorry with the Hapster. Fractional ownership deals almost never work out the way that people thought they would. One exception that I have seen is when family members go in together to buy something. Even that can cause a strain on the relationship if there is a misunderstanding or disagreement. Take a couple thousand of that $18K and rent something for 6 months to decide what is right for you.

 

[HAPPY]

Fractured,

Very well said,``` Jim, ``` good to see that there is a good ....cough :smile: realtor in PP,

```if I ever come across someone that is dead set on buying in PP ``` you be the one I'll send them to,

 

[Roberto]

An equity share is usually presented as a way you can 'Own" much more house than you can afford. What you usually own with an ' equity share' home is stock in a US based Limited Liability Corporation (LLC). The LLC is the owner of the property and there should be a bank trust in the name of the LLC. The number of shareholders is usually set by the bylaws of the LLC. The use of the property is defined and controlled by the bylaws of the LLC and is usually an equal fraction of a 52 week, or 365 day year for each shareholder. So if there are 12 shareholders, each would have the use of the property for 30 days abaout one month per year, this called a "12 share" . 1/8 share, 52 divided by 8 = 6.5 weeks, etc. Usually also there is a short period of time that the property is reserved for regular annual maintenance so that the number of share days does not add up to 365.

The cost of each share should reflect a fraction of the value of the property, so if a 1/8 share cost $50,000 it indicates the value of the property is $400,000. As the value of the property changes, the cost of the shares should change, but usually probably doesn't . An 1/8 equity share property might have appraised at $500,000 4 years ago but at $350,00 in todays market, a drop in value of $150,000 or almost $20,000 per share.

Mexican Hacienda (IRS) has been looking at LLC ownership since it is used as a means to avoid paying capitol gains tax. If a 1/8 share sold for $100,000 originally and then recently for $150,000, there is a capital gains liability on $50,000 which goes unpaid in an LLC since what is sold are the shares in the LLC, the property ownership as indicated by the Bank Trust does not change. Since it is a US LLC and all transactions are done in the US, at this juncture the Hacienda has no way to keep track of the sale. They are not happy about this because they are desperate for money.

You can also expect to participate in an HOA type organization comprised of your fellow shareholders in the LLC to make decisions about the property, use, improvements, repairs and modifications. You will have to cooperate with your fellow shareholders and compromise as needed. You will also have a designated management company to maintain the property, schedule use, clean, etc. You will have a monthly cost for all this, probably averaging more than an HOA payment for a Sandy Beach condo. If you are in an 1/8 share equity and the AC units require replacement, expect to pay 1/8 of the cost of that repair. Majority agreed upon replacement of linnen, flatware, dishes, furniture, etc, expect to pay 1/8 of the cost. If you are the poorest shareholder this could be a problem.

I was visiting with an owner of an equity share recently and he was complaining about the management company because they never submitted itemized bills for work done, placed the furniture where they wanted, not the owners, removed furniture put in by the owners, etc. Apparently the shareholders gave him the permission to do as he pleased through his management contract.

So, before you buy an equity share: 1. Examine the Bank Trust. 2. Examine the management company's agreement. 3. Have an attorney review the LLC papers. 4. Examine the HOA agreement. 5. Have deep pockets !

 

[Stuart]

Anybody want buy an equity share of my boat? Just be forewarned - you sink it, you bought the WHOLE thing!!! uff:


They do a very similar thing as described in this thread with houseboats on Lake Powell. Difference there is prime weeks. You pay much more to have a prime summer week, like Memorial Day, 4th of July, Labor Day. Early season or after Labor Day weeks are much cheaper. However, once you're bought in, you can pay a flat fee to launch the boat, cleaning, etc. anytime it is not in use. I explored this as an option many years ago, but decided I didn't want to spend every vacation at Lake Powell. Yes, you could swap your week to someone else, maybe for their timeshare in Cabo or something, but arranging all that is on you. Not truly like an RCI timeshare where you can just reserve at any hotel/condo that's part of the RCI network.

The whole timeshare or fractional ownership thing works well for some people. My old boss had 3 timeshares, several friends have one or two. Then again, maybe they just have issues saying NO! to pushy timeshare salesmen! Those guys do not take no for an answer; I've practically had to punch them out to get them to leave me alone on some vacations!!