Seize the Opportunity: How Co-Ownership Delivers Equity

Do you have equity in a timeshare? 

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In a timeshare, multiple buyers lease a property and have use of that property throughout specific periods of the year but there is no ownership of assets. Time is allocated, often through a points system, with fixed or floating periods. The equity of the holiday home remains with the original property owner.

"You never have equity in a timeshare as you don't own the underlying assets - you merely have the right of use," explains Daniël Newland, head of finance at August Collections. This way of holiday homeownership works for some, but a timeshare isn’t for everyone. Lack of clarity, ongoing maintenance bills and difficulty in reselling are some downsides.

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Equity with co-ownership 

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Co-ownership is essentially an evolution of the timeshare model: shareholders have equity in the actual property value which comes with advantages. "The critical difference with owning a share means you own a piece of the underlying assets, and therefore participate in decisions around the assets and also share in the overall growth in value of the assets - this is not true for timeshare," continues Daniël. With co-ownership, you have "real ownership based on subscription for an actual company share."

For example, in the August Collections co-ownership model, there are 21 shareholders for each property. The homes and entire Collections are 100% owned by the individuals who share usage rights and maintenance costs. Although the initial cost of co-ownership may be elevated by comparison to a timeshare agreement, there are additional lifestyle benefits to choosing this type of second home setup which we explore below. 

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Making The Right Choice

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_‍Deciding whether fractional ownership is better than a timeshare depends on a multitude of factors, including a person’s desire for equity. Here are a few key advantages to co-ownership:

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1. Seamless resales

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The beauty of August co-ownership is that you can have a love affair with Europe, with far fewer complications than if you were buying an entire property yourself. You have a more liquid product that moves with you and your lifestyle. "You can sell your share, and the value is tied to a number of factors, including the value of the underlying assets," notes Daniël. With a timeshare, you can sell your timeshare, but you might be subjected to a lock-in period, making it a more difficult and often costly process. "The value is not tied to that of the underlying asset(s) so it's not an investment as such," continues Daniël.

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2. A transparent and turnkey route to a holiday home

Keeping a property in good condition and legally sound can incur additional costs throughout the year with a typical timeshare, and this is one of the worries many may experience when deciding whether buying a second home abroad is a good idea or not. Fractional ownership offers a more turnkey solution to vacationing abroad, without the stress that comes with acquiring property on your own. Buying a vacation home in Italy, France and beyond can come with complications: navigating a foreign real estate market is difficult at the best of times, especially with language barriers and distance involved.

With co-ownership, you enjoy a more hassle-free holiday home experience. With August Collections, the expert team knows the industry inside-out and there is more transparency and clarity when it comes to maintenance, legalities and additional fees. You also are also involved in decision-making around the property, such as acquisition, upgrades and budgets, whereas timeshare holders will have "no or very limited participation in commercial decision-making," says Daniël.

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3. Use of more than one luxury property

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Another key advantage to a co-ownership model, like August Collections in particular, is that you will be able to enjoy not just one but up to five luxury properties in the best parts of Europe. From an authentically restored Tuscan farmhouse to a charming Catalan apartment in one of Barcelona’s most thriving districts, to have access to such a luxurious and unique portfolio of properties would be costly and time-consuming to bring to fruition yourself. With a share or multiple shares in August Collections, you can simply enjoy a finer way of travelling.

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For more information on how co-ownership works and to see how you might benefit from this type of holiday home setup, schedule a call with a member of our advisory team today and launch your European lifestyle today.‍