Partners to own ocean front property

[Adrienne Barnhart]

Looking to invest in ocean front home by spring 2024. Partnership, considering asking for 10% investors/5 weeks use share per year. Any advise, recommendations or other options/ideas that have worked well. Can't wait to connect.  Thank you!   

[JD Martin]

I know someone that did this with property in Costa Rica. What you're essentially doing is creating a miniature time-share. You'd probably want to create some kind of LLC to hold the property in, and you'd sell shares of that LLC to other investors. Probably you'd want to create the week blocks ahead of time and that is what investors in the LLC would receive as "dividends" on their investment. If you owned the property outright, you'd have controlling shares until the bulk of the investment was sold off to others. In your idea here, with 5 weeks to each investor, you'd probably reserve the remaining two weeks for maintenance and upkeep.

So each time you landed an investor, your controlling shares in the LLC would be reduced by 10%. Once you sold off 60% of the LLC, you'd still have the bulk of shares but could be outvoted by a combination of the other owners.

OR, you could sell off 49% of the shares so that you always ultimately controlled the fate of the property. You'd want to address things like right of repurchase, distribution of proceeds at sale, annual maintenance & assessments, etc. 

If you just want to do this because you want a house by the ocean and can't afford it on your own, I'd say you're making this way too complex and should just find something to rent when you want to stay somewhere for 5 weeks. The likelihood that you make any kind of profit worthwhile with a simple house with 9 other investors is pretty slim, and hashing out decisions with a raft of other owners is going to become un-fun in a hurry.