Vacation Income Property - Fractional Ownership investment strategies
by Leisure Properties Development & Marketing, LLC
Unlike taking yearly vacations at hotels and resorts or taking cruises and unlike buying Vacation Timeshares that offers you to part with 10,20 & 30 years of vacation expenses in advance, Income Vacation Property Ownership is an Investment Strategy that assures you almost-free to free (yes free!) vacations by providing an annual income and attractive capital gains on property resale.
With the recent world financial crisis, poor stock market performance including many failing stocks, poor - dismal interest paid on any cash deposits in the banks or on government bonds, it seems that there is nowhere to go to make money even in traditional small business such as retail stores or service companies.
What to do? Where can you actually invest in something and not expect to loose?
Answer is; In Real Estate, but not any real estate. While the residential real estate market is still in turmoils, vacation properties in the low-mid price ranges are doing good, why? Well most people have had to cut back on consumption and luxury over the last few years to better match their income to cost of living ratios to the realities of life. So vacationing and second home buying has downgraded, meaning that if before you could afford a luxury trip or vacation home, then now you are going to look at something more economical.
Back to fractional Ownership – A wise investment strategy; This relatively new form of property co-ownership is striving. It is a formula that better matches your income and use of discretionary income to a more logical allocation towards a luxury-recreational use by committing only a fraction of the cost and responsibility to fulfill your vacation needs. It is obviously much easier to commit to $15-$30 thousand dollars for a portion of the property than to commit to the full responsibility of an investment of $200-$250 thousand dollars and more, especially since you wont be needing a vacation property 12 months a year.
Yuma del Mar's Gated Community is a unique project at a great location that will offer many features that will benefit its residents … Ecological - Zero Carbon - Renewable Energy - Energy savings - Use re-use, etc.
Leisure Properties Development & Marketing was hired by Yuma del Mar not only to help market the project site, natural features and ecological options, but also to bring to market innovative vacation products, so we wanted to apply ecological concepts in financial terms – We have tweaked The Vacation Income Property - Fractional Ownership concept to offer the Vacation Home buyer and General Vacationer with Investment Plans that will work to provide economy, flexibility, income and PROFITS out of Vacationing - not wasting hard earned money into acquiring and maintaining a single family vacation home, empty most of the year
For the Dominican Republic's Yuma del Mar's Gated Community we have therefore created and defined an investment strategy using the pre-development Investment Certificates as a vehicle to enter into a Fractional Ownership of an Income Property. Most of the Condos and Villas that will be available in Fractional Ownership will always be profitable investments by carefully balancing the Construction cost and the Fractional Ownership unit costs. Such as any of our calculations can be extrapolated to more expensive or larger units, the investment performance will always be approximately the same.
Through the concepts we have designed, we achieve investment paybacks in 7.5 years!
You could be vacationing for free for life.
With plans starting at $15,000
We have built a couple of investment case studies for you:
CASE 1 (CLICK TAB TO OPEN)
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1/8 th Ownership - single room Condo Unit - $100,000 value |
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| This investment will provide 6 weeks of vacations for the investor. But in order to achieve Income Property status, we will in our study case decide to use only 2 weeks for personal use and rent out the other 4 through the Yuma del Mar rental management facility.
Investment required: $15,000
Investment valuation period: 10 years
Capital Cost per week 15,000/10yrs/6weeks = $250
Recurring cost per week= $175
Total cost per week= $425
Total cost over 10 years = $25,500
Rental income potential per week= $627
(Note this amount is not the room retail rate, this is what you can get after considering only a 65% occupancy, commissions, etc)
Rental income potential per year = $627 x 4 = $2,507
Rental income for 10 years= $2,507 x 10yrs = $25,070
Profit or loss after 10 years=
Total cost over 10 years = $25,500
Rental income for 10 years= $25,070
Your loss over 10 years= $430 appropriately
In this case study we have an investment with a return on investment (ROI) almost balancing off at year 10, actually 10 years and one month. This is equivalent to holding stock that has given you a dividend of $2,507 per year over 10 years (the rental income) But dividend on stock would not give you collateral benefits such as with this investment - Remember your 2 weeks of "free lodging for 10 years"!!!
But now suppose you want to get out of your investment after 10 years. You had purchased it at $15,000. What could it be worth in 10 years? Lets conservatively say it increased in value at only 4% per year. That property would then be worth $22,204, selling it would turn you a profit of over $7,000, not bad!
But remember, you don't have to sell it - You can continue to profit from your investment in 2 ways:
First; continuing to rent out your unused 4 weeks
Second; capital gain from sale of property at 20 years instead of 10 years
So lets project your gains over 20 years instead of 10
Now the rental income is almost all profit because in the first 10 years you paid off the $15,000 investment and covered the recurring costs, now your costs for the next 10 years are only the recurring costs, so:
Rental income for next 10 years= $2,507 x 10yrs = $25,007
Recurring cost = $175 week x6 weeks x10 years = $10,500
Your profit for next 10 years= $14,500 approximately!
Remember your condo is paid for your 2 weeks for 10 more years - "Free lodging"
Now after 20 years you decide to sell it all.
You had purchased it at $15,000. What could it be worth in 20 years? Using our same conservative value increase of 4% per year. That property would then be worth $32,867, selling it would turn you a profit of over $17,867, not bad! Plus the $14,500 in rental income profit for years 10 to 20, minus the $434 of first 10 yrs, that's a total of $31,998. More than doubling your investment AND vacationing for almost free for 20 years.
Do you need more to convince you that this is THE ONLY vacation platform that creates wealth for you instead of being only a total expense to you such as in traditional traveling or with Timeshares. If you continue to travel and pay for hotels at a cost of $750 per week for 2 weeks per year for 20 years, you would spend over $30,000 money lost forever. Timeshares will have you loose $8,750 (even after you sell your unit)
See other case studies.
You are welcome to develop other case studies using the online Investment Calculator.
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CASE 2 (CLICK TAB TO OPEN)
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1/4 Ownership - single room Condo Unit - $100,000 value |
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| We will begin with the same basic entry level offer as Case 1:
1/8 th Ownership in a single room Condo Unit valued at around US$100,000.
But this time we will simply increase our investment by acquiring another 1/8 Fraction (taking advantage of the second 1/8th for only $10,000 more) for a total of 2 - 1/8th Fractions.
This investment will provide 12 weeks of vacations for the investor. But in order to achieve Income Property status, we will in our study case decide to use only 2 weeks for personal use and rent out the other 10 through the Yuma del Mar rental management facility.
Investment required: $25,000
Investment valuation period: 10 years
Capital Cost per week 25,000/10yrs/12weeks = $208
Recurring cost per week= $175
Total cost per week= $383
Total cost over 10 years = $46,000
Rental income potential per week= $627
(Note this amount is not the room retail rate, this is what you can get after considering only a 65% occupancy, commissions, etc)
Rental income potential per year = $627 x 10 = $6,266
Rental income for 10 years= $6,266 x 10yrs = $62,664
Profit or loss after 10 years=
Total cost over 10 years = $46,000
Rental income for 10 years= $62,664
Your Profit over 10 years= $16.664 approximately
In this case study we have an investment with a return on investment (ROI) of 7.35 years. This is equivalent to holding stock that has given you a dividend of $6,266 per year over 10 years (the rental income) But dividend on stock would not give you collateral benefits such as with this investment - Remember your 2 weeks of "free lodging for 10 years"!!!
But now suppose you want to get out of your investment after 10 years. You had purchased it at $25,000. What could it be worth in 10 years? Lets conservatively say it increased in value at only 4% per year. That property would then be worth $37,006, selling it would turn you a profit of over $12,006, Adding your $16,664 profit from renting totals $28,670 for 10 years!
But remember, you don't have to sell it - You can continue to profit from your investment in 2 ways:
First; continuing to rent out your unused 10 weeks
Second; capital gain from sale of property at 20 years instead of 10 years
So lets project your gains over 20 years instead of 10
Now the rental income is almost all profit because in the first 7.3 years you paid off the $25,000 investment and covered the Recurring Costs, now your costs for the next 10 years are only the recurring fees, so:
Rental income for next 10 years= $6,266 x 10yrs = $62,664
Recurring cost = $175 week x 12 weeks x 10 years= $21,000
Your profit for next 10 years= $41,664 approximately!
Remember your condo paid for for 2 weeks for 10 more years - Free lodging
Now after 20 years you decide to sell it all.
You had purchased it at $25,000. What could it be worth in 20 years? Using our same conservative value increase of 4% per year. That property would then be worth $54,778, selling it would turn you a profit of over $29,778, not bad! Plus the $41,664 in rental income profit for years 10 to 20, plus the $16,664 rental profit in the first 10 years.
Your complete profit over 20 years would reach $88,106. More than tripling your investment AND vacationing for almost free for 20 years.
Do you need more to convince you that this is THE ONLY vacation platform that creates wealth for you instead of being only a total expense to you such as in traditional traveling or with Timeshares. If you continue to travel and pay for hotels at a cost of $750 per week for 2 weeks per year for 20 years, that $30,000 in EXPENSES, lost forever. Timeshares will have you loose $8,750 (even after you sell your unit)
See other case studies.
You are welcome to develop other case studies using the online Investment Calculator.
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