Ever have the urge to own a cow in Iceland or maybe a truffle tree in France? Or how about investing in the career of a rock n' roll artist?

The idea of buying into these and other fanciful "investments" may not be as outlandish as you may think.
Whether one's ownership desires are exotic, unusual or downright conventional, new opportunities are arising for investors to own a piece of just about anything imaginable.

The key to this treasure trove of riches is fractional ownership.

Legal arrangements that allow investors to share in the ownership of everything from a luxurious vacation villa to a pet cat are becoming quite the rage. In a trend that may be partially due to the global recession, the wealthy are looking for ways to spread out the cost and upkeep of their lavish new toys. In response, the market has sprung forth a number of firms that facilitate such arrangements.

Experts in the field say it's becoming important for advisors to know the ins and outs of the fractional ownership market,
particularly those serving a high-end clientele.  

"Fractional ownership of anything makes maximum use of the utilization of goods-own it and use it only when you want," says Piers Brown, founder of Fractional Life, a London-based company that runs an online "superstore" of ownership opportunities at www.fractionallife.com. "It's [also] fun."

Fractional ownership is essentially the shared ownership of an asset by two or more individuals. It basically expands on the time-share concept that has traditionally been used for selling vacation homes and other properties. The big difference, according to experts, is money. Time-shares can typically be had for a few thousand dollars, for an allotment of time that might consist of weeks. Fractional ownership contracts, by contrast, reach into a rarified stratosphere of wealth, covering things such as high-end resort properties, corporate jets, yachts and rare collectibles.

Fractional ownership also has it quirky categories.

Brown says he has found fractional ownership deals that allowed high-end clients to own a piece of truffle trees, emerging musicians' income and pet cats. At least one fractional ownership plan offers partial ownership of Icelandic cows, whose milk can be used for the production of specialized cheese.

Gotham Dream Cars, with locations in New York City and Florida, offers fractional ownership plans that give customers access to a fleet of sports and luxury cars. Customers can drive a different make and model every week, if they choose, without worrying about maintenance and the other headaches of full-time ownership, company officials say.
Transportation is generally considered an ideal market for fractional ownership deals.

"There is an advantage to splitting the cost and sharing the risk of a huge investment like an airplane," says Alan Weinstein, a CPA and co-founder of RWE Private Wealth, a multifamily office in Tampa, Fla., that has several clients that make use of fractional ownership plans.

Weinstein and Seth Ellis, another co-founder of RWE, have put together many fractional ownership deals for clients, including contracts covering the ownership and use of planes and helicopters.

"If you own a jet, you have to consider $100,000 a year in maintenance, and you need to know when to buy and when to sell," Weinstein says. "If you split the responsibility and the financing, it becomes more manageable."

"But there are issues to consider for fractional ownership, too," he adds. "State laws govern much of this, and they vary from state to state. There are tax considerations and much of the tax advantage to partial ownership was eliminated in the 1980s."
Ellis says fractional ownership plans can get complicated, particularly when it comes to putting a value on an ownership stake.

"We have a family that has three siblings and they share the family business. We have one client who shares a beach house with his business partners," he says. "You have to decide how to value the interest in the ownership, which also brings into consideration estate planning. You have to consider the interests of minority owners and how to get your money out if you cannot sell."

Estate and gift tax regulations fall under federal law and can change frequently, Weinstein warns. "You need to have liability protection that depends on the type of entity you create for the purchase and you need protection if there is debt on the property. Everyone needs to understand all of these issues," he says.

"You have the same kind of problem if someone dies: How do you value the property?" Ellis adds. "And what happens if someone does not make a $20,000 capital call when you need to raise money?"

Despite the legal and tax considerations, the arrangement can work well between strangers or friends, they say. Michael Mantovani, who is in television production in Orlando, Fla., is an RWE client who has half ownership in a yacht with his business partner.

"We thought of buying an airplane for business, but that would just get us to work," Mantovani says. "We wanted something that would give us fun. We knew we could buy a bigger boat if we bought it together. We call it our investment in our sanity, but it will depreciate in value, so it is not a financial investment.

"We usually use it together so there is no conflict. But you have to consider the legality of owning something with a partner. There are many provisions that can be written into fractional ownership arrangements: who uses it when, how to raise money when needed, when do you decide to sell or trade up, what happens if one person needs their money?" Mantovani says. "We also use the boat (valued at about $900,000) for business, so we have to bring in our financial advisors, attorneys and business accountant."

Because of the chaotic market and financial problems it is causing, some high-net-worth people have been shying away from flaunting their wealth, says Mitchell Katz, president of Premier Financial Services, based in Woodbury, Conn. Premier specializes in financing lease-to-own or straight leases of luxury, vintage and exotic cars, many worth more than $1 million.

"There was a slowdown last year because some people did not feel good about showing up in a new Bentley, but people are starting to spend money again," Katz says.

Noah Lehmann-Haupt, founder of Gotham Dream Cars in New York City and Florida, agrees.

"It is a crazy economic time right now," Lehmann-Haupt says. "Our business is not growing, but it is not shrinking either. But people are not buying luxury cars right now, so we would expect our membership to start growing again when more money is available."

DreamShare, a fractional ownership division of Gotham Dream Cars, has a $3.5 million collection of cars and Lehmann-Haupt hopes to expand it with a Rolls-Royce Phantom, a Mercedes-Benz SLR McLaren and a Ferrari 599 GTB Fiorano.

As for the legal considerations, Fractional Life's Brown strongly advises financial representatives to consult specialists in fractional ownership.

"Financial advisors need to determine from their clients if the ownership they are contemplating is a lifestyle or investment purchase, or both. They need to know what the exit strategy is and everything that is included, such as annual dues and service charges," Brown says.

After all those things are planned, the fun can begin for the wealthy or even the not-so-wealthy. Something as practical as furnishing a son's or daughter's college dorm room can be done fractionally through Evolving Vox, a student-run business at Dartmouth College that allows college students to temporarily own furnishings for their rooms.

Other examples of fractional ownership plans include Crush Pad of San Francisco, which offers partial ownership in Napa Valley vineyards. The fractional owner can select any level of involvement in the winemaking process.

Truffle tree ownership was created, in part, to encourage an interest in French cuisine, the woodland countryside and the heritage of the truffle, according to www.truffle-tree.com.

Slicethepie.com allows investors to become part owner of music artists' careers, offering owners free CDs and a share in future royalties.

"When we first formulized our business, we were excited about the possibilities of jet, yacht and real estate fractional ownerships," says Brown of Fractional Life. "As the industry has evolved and people's tastes have expanded, the possibilities of fractional ownership and asset sharing of luxury items have grown into more than we ever dreamed. Who would have thought you could fractionally own a truffle tree or your own racehorse? The possibilities truly are endless."