Shared ownership allows you to purchase a portion of a residential property or private yacht, sharing the remainder with one or more co-buyers. This post explains everything you need to know about shared ownership vacation homes, including yacht shares and shared purchase options aboard Storylines' luxury residential ships.
Fractional real estate investing
Factional real estate investing is one of the most popular forms of shared ownership for those who are looking for a second home that they only plan to live in part-time.
In this real estate model, properties with the potential for high rental income and capital growth are purchased by a company and placed in a trust. The property management company then divides the home into any number of assets, like shares in a company. Investors can purchase as many or as little of these assets as they like. The property management company finds a tenant, and the investors receive rental income depending on the number of shares they own.
As a result, fractional owner investing platforms have sprung up worldwide. Take Fractional a US app that allows you to co-own property with friends and investing communities. Also take a look at Australia's fractional property platform, BrickX. Both of these programs provide an accessible way to generate income. These kinds of platforms are taking off, showing that fractional ownership investment isn't a passing fad; it’s here to stay.
Fractional ownership for private residence clubs
In the ‘private residence clubs’ model, people buy into a hybrid vacation home at a resort for personal use. Many prestigious international destination clubs have enthusiastically adopted the model, especially in Europe and the Caribbean. A destination club has a few owners who can share in one or more vacation homes or a multi-unit building.
The ongoing maintenance fees are proportionate to their ownership interest. The owners gain access to resort communities with a hotel-like swimming pool, hot tub and daily housekeeping, allowing owners to live in comfort. Annual fees are additional to pay for the property’s amenities and services.
Shared vacation home ownership
Shared vacation home ownership is precisely as it sounds. Instead of buying into a resort community, you have shared ownership of an independent vacation property. Like the fractional ownership model, a shared vacation property offers actual ownership. It is increasingly popular for people looking to purchase a second home. As owners only buy a portion of the asset, this model works well for high-end vacation homes.
Benefits of a shared ownership home include:
- Less down payment
- Shared ownership-friendly mortgages
- Lower monthly payments (if borrowing)
- Shared maintenance costs and other associated fees
- Allows prospective buyers to purchase luxury homes in their desired location
However, shared vacation homes require more complex contracts and legal work. Getting a proper conveyancer or real estate attorney is crucial to ensure you have an agreement that protects all parties involved. Legal shared ownership is crucial if you are looking to secure shared ownership mortgages.
Usually, shared ownership works when a third party is involved such as a real estate agent or property management company. They will arrange the appropriate contracts and take on management responsibilities. The ownership agreement will stipulate the sharing of costs such as:
- Property price
- Property management
- Property taxes
- Maintenance and repairs
Shared vacation home ownership generally has an LLC entity acquire the home. The LLC can have several ownership interests, and buyers can purchase as many shares as they please. The manager of the LLC then facilitates these transactions.
Owners can sell a share or acquire more if available. The owners' usage rights for the shared vacation home depend on the number of shares they have.
Yacht co-ownership, (aka yacht-share), has long been a popular form of shared ownership assets, and it's easy to see why. You may have heard the saying:
The goal isn't to own a boat but to be friends with someone who does.
The average ongoing maintenance of a 150 ft superyacht is roughly $2 million yearly. Moreover, a yacht is something most owners do not use full-time. So, like a second home, it makes sense to only own a yacht part-time for when you plan to use it.
Yacht fractional ownership usually involves a management company arranging the shared ownership agreement of a yacht to several buyers. All fractional owners get an equity stake and allotted time; they can use the vessel depending on their percentage of the total they fund. Similarly, the ongoing maintenance fees are split up per share, which is paid to the management company responsible for the maintenance and allocating the calendar days.
There are several benefits to fractional yacht ownership, including:
- Significantly lower upfront cost
- Much lower ongoing maintenance fees
- Generally easy to exit and sell your shares to another owner
- Possibility of management company chartering your vessel for days unused, providing income to offset maintenance
- A management company takes care of maintenance, hiring crew and allocating usage rights
The downside of shared yacht ownership is the restriction on the time you can use it. Say, for example, you wanted to sail or cruise around the Caribbean for six months. Your allocated days will only allow this if you own at least fifty percent and your co-owner agrees to the six consecutive months.
How about sailing your co-owned yacht around the world? Not likely. The co-owners must agree on where the yacht’s cruising ground(s) will be. Will everyone agree on the Caribbean in winter than shipping it to the Mediterranean in summer? Maybe some want to cruise French Polynesia, but others don’t want to pay to have it shipped there. There are many logistics to consider.
Why fractional vacation homes and yacht-shares are so popular for co-ownership
Vacation homes and yachts are popular for shared ownership purchasers mainly due to their part-time use. Many people desire to own a second home or a yacht but cannot justify the expense if the asset is only used occasionally.
Fractional purchase options on a residential ship
As we've covered, fractional ownership has traditionally worked best for three main areas:
- Fractional investing
- Vacation property/second home
- Yacht co-ownership
Now there is a fourth option. Storylines residential ship has a limited number of residences available for shared purchase, a hybrid model of all three sectors. But first, a bit of background.
Storylines is building MV Narrative, a luxury private residence ship focusing on wellness and sustainable global travel. The vessel offers condos ranging from roughly US $1M for a studio to $8M for a four-bedroom penthouse with two balconies. The continuously circumnavigating ship attracts families, remote-working entrepreneurs and early retirees. The ship's advanced technologies and facilities enable its residents to work and learn from anywhere on the planet.
Due to increased demand and feedback, and in recognition that not everyone desires to live on a ship full-time, Storylines has allocated a select number of residences for shared purchase. These are the most unique and rewarding vacation home properties offered in the global real estate market. As we can see, vacation homes and yachts are highly desired by globally-minded people worldwide.
MV Narrative is a vacation home, superyacht, and a tightly held investment. You can now have all the benefits of a global lifestyle for a fraction of the cost.
All-inclusive fees: put your wallet away
One of the main appeals of the Storylines global lifestyle is the all-inclusive model. It allows for predictable expenses for those living on a fixed income and a hassle-free onboard experience.
You've probably heard the cliché; you only unpack your bags once. Your all-inclusive fees mean you don't even need to unpack your wallet. Most things are included, meaning you can live a five-star lifestyle on par with average living expenses in cities such as New York, London and Tokyo.
Some of what your monthly fees include:
- Fuel, port taxes, crew and vessel insurance
- Laundry service
- Meals in 20 multicultural dining venues
- Most wine, beer, spirits, cocktails, coffee & juices
- 24-hour room service
- Fast internet throughout the ship
- Premium satellite television
- Access to a gym, spa and wellness center
- Entertainment including cinema, live music and shows
- Oceanside marina with kayaks, scuba and snorkel gear
Furthermore, the upkeep and maintenance of your second home are all taken care of when you live in a fractional unit. This means all you have to think about is getting there.
About Storylines shared purchase residences
Storylines has introduced a limited release of residences with shared purchase options.
- RU4 Dream residence is 721 square feet with a balcony. The introductory pricing for a 25% share is $1,275,000 for the lifetime of the vessel, with $37,000 due annually for quarterly all-inclusive living fees.
- RU2 Explore residence is 337 square feet with a balcony. The introductory pricing for a 25% share is $598,000 for the lifetime of the vessel, with $26,700 due annually for quarterly all-inclusive living fees.
The 25% shares are broken down by season:
- December through February
- March through May
- June through August
- September through November
You can easily sail around the world three months a year. You can have as many or as few shares as you please. If you want to spend six months of the year on the ship traveling the world from home, you can buy two shares.
Likewise, you can buy all four shares if you want to test out living on the ship year-round or retain the option to re-sell some of your seasons. This can also be useful if your investment increases, meaning you can sell at a profit while offsetting the cost of your remaining shares.
Also, note that shared ownership homes can also be lent out to family and friends.
Investing in a Storylines Shared Purchase Residence
The first residential ship was launched in 2001, and the resident owners have seen their values increase significantly. For example, a 2 bedroom, 2 bath, 1,000 square foot residence sold for about US $4.5M in 2021 (double the purchase price 10 years prior).
This hints that Storylines residences at sea also have the potential to become extremely tightly held assets. The earliest buyers of Storylines residences have already doubled their investment before the ship had even begun construction. It is anticipated that they could triple by the time the ship sets sail in 2025.
Unlike new land-based homes, where the supply is almost limitless, a very limited supply of these unique homes are available on residential ships. With these unique vessels being introduced to the market only once every 24 years, it could very well be a once-in-a-lifetime opportunity. The barrier to enter the residential ship market is high. Storylines will be only the second residential ship on the seas after The World.
As you can see, fractional ownership of a Storylines residence is arguably one of the most unique and rare investment opportunities in the global real estate market today. These are extremely rare pieces of real estate. As a result, high resale values are anticipated.
Storylines is a luxury lifestyle ship with a like-minded community of globally-conscious citizens living aboard and traveling the world. We seek unique experiences, cultural events, and community participation while practicing and promoting sustainable travel. To learn more, visit our website.