In a nation that has, over the years, adopted a throw away culture mentality, designer clothing, gourmet, disposable coffee cups, luxury automobiles, empty Cristal bottles and Beluga caviar tins are among the discarded items that cover the landfills of the US. So no matter how much the price tag reads on a high-end item, inevitably, it will end up somewhere in the vicinity of a McDonald’s hamburger wrapper. Each year, the average American produces approximately 1,570 pounds of unwanted ‘stuff’ – no wonder the green movement is so essential. It seems that in a world where the consumer is constantly, well, consuming, the first thing that needs to be reduced, reused and recycled is all that luxury “stuff.”
Enter fractional ownership. From stakes in wineries to horses, handbags to boats and vacation properties to jets, owning a piece of luxury, rather than the whole thing, is gaining popularity. Historically, this notion of asset sharing has been linked to real estate properties in the form of vacation homes or timeshares. Today, the fractional ownership realm is much broader, enabling the owner to invest less among more ventures, including jets, fine art, luxury handbags and yachts.
One appealing aspect of fractional ownership is the concierge service that accompanies the purchase. For example, if you purchase a fractional share of a luxury automobile, the vehicle will be tuned up, gassed up and ready to drive from zero to eighty when you slide into the black, leather seat – no maintenance necessary. In a nutshell, your investment interests are being taken care of for you.
Another advantage of fractional ownership is the ‘flavor of the month’ appeal. Less commitment is needed and this, in turn, allows the buyer to sell his/her share when the next ‘It’ thing hits the market, instead of the entire cost of the item monopolizing one’s capital. Sometimes fractional ownership allows the buyer choices across various types of automobiles or vacation homes. Perhaps this week a Mercedes Benz E-Class will do, but next week you want to impress your client with a Bentley Continental GT– fractional ownership gives you this flexibility.
Fractional ownership also makes perfect sense for the individual who will only use their luxury item sporadically. Why own a villa in Tuscany if you will only visit Italy once a year? Perhaps a luxury timeshare is more practical and will allow you to take more frequent vacations to various destinations around the globe, including stays at luxury hotels as well as bed and breakfasts.
Another way to look at fractional ownership is from an experiential viewpoint. Some buyers are investing in the experience that the luxury item can offer rather than the sheer value of the product alone. If you are an adventurous person who likes to try new things, fractional ownership will allow you to spread your investments across many ventures, rather than just one or two – depending on how much capital you intend to invest.
Fractional ownership, like most investments, does not come without risk. Remember that you are sharing your investment with other owners and may not be able to use your automobile, helicopter or vacation home at the spur of the moment – typically reservations are required. There may also be time and/or geographical restraints on your purchase; for example, you might only be able to use your Ferrari for five days at a time and be limited to driving it within a tri-state area. Also, should the fractional ownership company run into business difficulties, your investment might not be as sound as you would have expected. Be sure you sign with a reputable company that has some experience under their belts. This will also be an important factor to ensure service and maintenance is top notch. And remember the age-old adage, don’t put all your eggs in one basket; with fractional ownership, that certainly is not the case.
So how does this fractional ownership concept affect you? Short of personally investing in a fractionally owned product or service, how does the information gleaned above apply to your business ventures? Ponder this, do you have a luxury product or service that can tap into or benefit from the fractional ownership concept? Perhaps selling your product outright is the best course of action for you. What about providing the most expensive of your offerings as a fractionally owned investment, appealing to clients who may own one of your products outright, but may be willing to share another? Obviously, the world has come a long way from simply renting tuxedos, DVDs, cars and carpet shampooers – so why not jump on the bandwagon! It seems today you can own a piece of just about anything – practical or otherwise. So perhaps you too can incorporate the fractionally owned concept into your business model. Plus, in the long run, you will prevent more luxury items from ending up in the trash bin!
Examples of fractional ownership companies:
Various Luxury Items
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