I love vacation. My family loves vacation. I also love making money and hate spending it on anything that doesn't somehow make more money. Why not use our knowledge and abilities to have someone else pay for our vacations? I know what you are thinking, "Ugh! Another bullshoop scheme!" But there are quite a few ways to have other people pay for your family vacations without having to be an "influencer" or being "Insta-famous."
A decent option that many houseboats use is the Fractional Ownership model. There are a couple of ways to get into this for houseboats, homes, trailers, leisure boats, or anything else vacation related. The first (and my favorite) is to buy a home or houseboat initially and the second is to buy a share of the corporation.
The first option would be my choice. To do this, you must set up a corporation to own the property. As you do this, you will need to package the home with rules, regulations, duties, sales plans, and get the property (or floating house) completely vacation ready. Your initial cost is high, but you are going to sell shares in the corporation as fractional ownership portions.
Houseboats are usually seasonal, and typically have no more than fifteen weeks in which they will be used. With a home, you may be able to find a place that is attractive year-round. In that instance, you have 52 weeks that you can sell! You can subtract a couple maintenance weeks to make repairs easier or for "management repair weeks."
At this point, you need to advertise and sell them. A fair way is to take the appraised value of the assets of the corporation (or the house) and divide it by how many weeks you want to sell. As president and CEO of the corporation, you can charge as much or as little as you would like. Keep in mind that you have to manage the entire corporation AND the members. This is hard without a major commitment or subcontracting it out.
Take a second and figure out your take on something like this. You buy a decent ski vacation home for $250,000 in the North Carolina mountains that have great outdoors activities all year. Furnish it for $20,000. Just pretend that you only want to sell 40 weeks. 270k/40=$6,750 per week. Most crappy timeshares cost triple that and have fees all over the place. Some weeks are more expensive or premium than others but let’s just say that you charge $10,000 per week: you just sold for $400,000 and have 3 months to use whenever as additional weeks for members to purchase or to use as repair weeks. You may want to leave the big holidays as purchase weeks. Owners can purchase these weeks/holidays on a first come first serve basis.
Now, you have completely paid for the home plus money in your pocket, but you need to cover annual expenses. Every year, you have taxes, insurance, repairs, upgrades, and maintenance. These are split evenly across the owners or you can set up yearly dues with a bank account reserve specifically for repairs.
Take the roof for instance; it is 10 years old, will be usable for another 10-15 years, and will cost $8,000 to replace. Thusly, you start getting the money now. $800 a year for ten years will cover a new roof, so you divide that cost among the owners as a maintenance fee. It is best to do this with all major items in the home and figure depreciation on all of the big expenses in the future. This will give you an operating account to cover expenses. And when something unexpected happens, you use what is needed and divide up the cost.
Some of the other expenses you need to split: cable/internet, utilities, taxes, HOA dues, yard upkeep, etc. Everyone owns a portion of the property, but the advantage is that they get to split up costs and have access to (usually) a nicer vacation than they would be able to get on their own. And they have ownership in an appreciating asset with the ability to sell their shares!
As with anything, people will want an exit strategy. It is best to have first right of refusal for the corporation to buy back shares from owners that want out. The owner of said share will let everyone else know they want out and give them an option to buy them out. If no one wants their week, the owner can list the share any way they want, but before accepting an offer, the corporation can approve it or buy the share for the same sale price.
You don't want the home to turn in to a hovel, so it will need consistent maintenance to keep it tip top. Managing a corporation like this will take some work. You will need to develop standard operating procedures and communicate them to all members in and understandable written document. You also have to understand that you can't make everyone happy. The plus side is that you can charge a management fee if you want.
I have given a lot of information in this article, but you would need to speak to your attorneys, accountants, wives/hubby/partner, and any other experts you can think of before going through with this plan. I am none of this, so take it with a grain of salt and do your due diligence.
I absolutely love the idea of Fractional Ownership, but after you are done selling the shares, you are done making real money. You can do it over and over but be sure to read about the other ways that you can have someone pay you to take vacation! Vacation is expensive, so why not find a way to have someone else pay for it?
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