Ownership FAQs
After reviewing the investment opportunity for the Tenthouse Suites at Rockwater Secret Cover Resort, you may have some questions. It is our hope you will find the answers below:
When can I purchase?
Tenthouse shares will be available for purchase as soon as the disclosure statements are filed with the Superintendent of Real Estate. We anticipate this happening by mid 2008.
How many shares are available?
Right now there are 13 Tenthouses in operation, and we have the space to construct three more. Thus there could be up to 64 shareholders - unless some individuals opt to own more than one share.
Exactly what will I own?
As a shareholder, you will have an interest in the entire resort and in the land itself - one of the most beautiful parcels of property on the Sunshine Coast!
It is important for you to read the full disclosure statement when it is finalized, but here is an overview of the structure:
The resort is composed of three distinct sections, each with a different group of structures. The main lodge is in the center, with cabins on the west and the Tenthouses in the east section.
Three sectional owners associations will be formed to correspond to the three geographic sections - and these three sections will be the shareholders and directors of a new corporation - the Owners Corporation.
As a shareholder in the East Section, you will have a voice in the control of land and improvements in the East Section of the resort, and your Owner's Association will have a voice in the overall management of the resort.
If, at some point in the future, the three regional owners associations agreed to sell the resort, 1/3 of the proceeds would go to the Eastern Owner's Association and would be distributed pro rata among the quarter share owners.
Where is Secret Cove?
In one of the most beautiful spots on earth: British Columbia's Sunshine Coast.
Are there purchase expenses or fees?
No. Only GST, if applicable. While you do want to check with your tax advisor, it is our understanding that the amount of GST owing is based on an initial estimate of how much personal use you will enjoy.
For example, if you are a typical quarter share owner, you would likely use 30% of your time personally, with your share available for rental the balance of the time. In this case, assuming next year's GST rate, you would owe only 30% of the 5% GST - or only 1.5%.
Do you offer financing?
No. For most people, the least expensive form of financing is a line of credit based on the equity in their home. Check with your tax advisor - but this should make interest costs a tax deductible expense.
What are the long term plans for Rockwater Secret Cove Resort?
Our long term plan is to maintain our position as the premiere resort on the Sunshine Coast.
The only dramatic change planned for the resort is in regards to the current cabins that are situated to the west of the main lodge. It is our plan to remove the 11 cabins and replace them with 20 Beach House Cottages complete with kitchens. It is our intention to begin marketing these cottages during the summer of 2008 and begin construction once we have them all pre-sold which we anticipate will be in 2009. These Beach House Cottages will be sold as whole ownership at a price of approximately $750,000 each.
As repeat guests will testify, we've been making improvements since we purchased the resort in 2004. The dramatic increases in room occupancy attest to the effectiveness of those improvements, and we will continue on the same path.
The tents themselves:
The entire concept behind the Tenthouse Suites focuses on giving guests the opportunity to step outside of the routines of daily life and into a sanctuary of pristine nature. That's why there are no kitchens, and no televisions.
The goal is for guests to luxuriate as if in a spa, contemplate as if in a retreat, or romance as if in a hideaway. Each tent has only one bed, because part of the overall ambiance is complete privacy. Future tents will be constructed in the same manner.
Based on the enthusiastic reactions of guests, visiting designers, and travel writers, we think this is a product whose time has come. When life becomes too busy and people and responsibilities crowd in - the tents are a place to get completely away, yet still enjoy the luxury of fine dining, jacuzzi tubs, and massages on the beach.
The media attention we've received because of the unique experience of vacationing in a Tenthouse Suite is, of course, a second reason for the dramatic increase in our occupancy rates.
To date, the Tenthouses seem to require little maintenance. At some point, certainly, the outer material will need to be replaced. Since the Tenthouses are fairly new, we don't know how long that will be.
Each Tenthouse has been certified as structurally sound by a structural engineer and has been approved by the Sunshine Coast Regional District building inspectors.
It is important to realize that although the Tenthouses were expensive to build, the majority of the cost was in the radiant heated slate floors, the wood platform, the aluminum structure, steel guy poles, stainless steel rigging, electrical wiring, plumbing, furniture and fixtures. All of these are long life assets. The actual cost of reskinning the outer material is but a small part of the overall cost. A sinking fund of $500 per year per owner will be set aside from revenues to cover costs of repair or replacement.
Despite the winter of 2006 - 2007 being one of the stormiest and coldest on record for the Sunshine Coast, the Tenthouses performed well. The resort experienced hurricane force winds during the storm that devastated Stanley Park, but there was not a bit of damage to any of the six Tenthouses that were operational and inhabited at the time.
During a wind storm in early November 2007, winds in excess of over 100 km/hr hit Secret Cove. Once again, there was absolutely no damage to the Tenthouses.
The plumbing system in each Tenthouse is equipped with easy access points to allow us to clear water lines in a matter of minutes. This is done for any Tenthouses not in use. For those in service, we keep warmth and continual water running during extreme freezes.
Please take a look at the attached spec sheet for a more detailed list of the engineering of the tents.
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How can I use my share?
You can choose to use your seven days per month or make them available for rental. You can group the days together for an extended vacation, or take several mini-vacations throughout the season.
You can also trade with other shareholders in order to make Tenthouses available for friends of family who may wish to travel with you. We will maintain an internet listing where owners can post desired trades. Because each Tenthouse is pooled rather than owner specific, flexibility in scheduling is greatly enhanced.
Your weeks are yours. You can use them yourself, or gift your time to friends, clients, staff or family - and what a spectacular gift you would be giving!
In order to enhance your investment and make your share available for maximum income generation, we do need to follow a reservation system. There is a rotating calendar schedule which will show the weeks available for each quarter owner. Each year you will be asked which of your time you would like to use personally (or gift) and which you would like to make available for rental.
There is no charge if you cannot use a time period you had reserved for yourself. Also, if you suddenly find yourself wanting to use time you had made available for rental, you may be able to do so upon 14 days notice - provided that it has not already been booked.
The Tenthouses are owned in common and available for all quarter share owners. When you book, you can request a particular Tenthouse and we will try to honor the request. Reservations for owners and guests are on a first-come, first-served basis, so if a particular Tenthouse is your favorite, book as early as possible.
All of the Tenthouses have breathtaking vistas, but each is a little different from the next - making each special and unique. Some have sunrise, some sunset - so you can enjoy your favorite time of day. We hope that use of different Tenthouses on different occasions will add to the pleasure of your visits.
When you use your own time there are only housekeeping charges: A turn-over cleaning charge and set-up when you leave and a smaller daily charge for room tidy-up.
As a shareholder, you may sell or will your interest. The only restriction is that the new owner must agree to abide by the same rules and regulations which govern you and your fellow owners.
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Added Benefits…
As a shareholder, you will always enjoy the benefits afforded to any guest, and will be able to use the facilities of the resort even if you are not staying with us at the time. You will also receive discounts on various services at the resort, such as kayaking and spa treatments.
The financial forecast
No one can predict the future and past history is never a guarantee of future performance, but all signs point to continued revenue growth for the Tenthouse Suites.
Our revenues per available room jumped 68% from 2005 to 2006, and then took a second leap of 41% from 2006 to 2007 - making an overall increase of 138% in just two years.
This was due to both price increases and a higher percentage of occupancy from year to year, proving that room rental rates are not a deterrent for vacationers in search of a unique luxury experience.
In 2007 we were visited by guests from across the nation, and from several foreign countries. Our marketing efforts, word-of-mouth advertising from satisfied guests, and the free media exposure we enjoy, should ensure that our occupancy rates continue to rise.
In fact, some guests are so anxious to ensure their space that we were taking reservations for the 2008 season since early October.
Fees:
Cleaning fees consisting of a $50 turn-over fee for each new guest and a room tidy-up fee of $25 for each day after check-in will be deducted from the room rental fees before they are divided equally between the shareholders and the resort.
A Capital sinking fund of $500 per shareholder per year will be held for repairs and maintenance.
Each owner will be responsible for his or her share of maintenance of the boardwalk and Tenthouses, as well as a share of utilities, property taxes, and insurance. Before investing, you will have access to a budget which we are now preparing based on past numbers and future estimates.
It is our understanding that you will be allowed to deduct these expenses to the extent that your share was used for rental rather than personal use. Please consult with your tax advisor for specific details.
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What if nobody rents "my" Tenthouse?
Ownership is pooled, so it won't matter which Tenthouses are occupied on a given day. All revenues, less the management and cleaning fees, go into a pool which is divided equitably among the Tenthouse owners.
Revenues are divided according to the total number of nights made available to the rental pool during that period by each owner. This is easily calculated by dividing the total number of tent nights available from all owners into the total revenue earned for the period.
The average revenue per available tent night would then be multiplied by the number of tent nights you made available, and that would determine your share of the rental revenue.
What can I expect as a return on investment?
This is a tough question, because the answer depends not just upon future behavior of guests, but on your own personal activities.
And… we know of no way to put a price tag on the benefits you'll reap when a soft breeze whispers through the trees and carries off your stress
Guests in high-pressure professions tell us that after a few days in a Tenthouse Suite, they return to work refreshed, rejuvenated, and able to see all situations in a clearer light. They're also able to shrug off stresses that previously would have monopolized their attention and ruined their productivity - perhaps for days at a time.
That kind of rejuvenation does have a monetary value - but we don't know how to measure it.
Your actual monetary return on investment will depend upon how many days you choose to spend at Secret Cove each year.
You could use your full 84 days and see no monetary return. In that case, your investment would be personal - much as if you had purchased a waterfront cabin, but without the cares of upkeep or the worries of vandalism while you're away.
If instead you choose to use a week each in Spring, Summer, and Autumn, you could see a return of approximately $1,700 - while still enjoying three blissful weeks of vacation luxury - without the responsibilities of cabin ownership.
If you choose not to use any weeks at all, your monetary return would increase to approximately $2,500 for the first year. But we don't recommend that. Everyone needs relaxation and rejuvenation at some time during a year.
Our current projections are based upon a minimal rise in occupancy rates - so the potential exists for a much higher return. Either way, your quarter share is an asset destined to grow, because you'll have an equitable interest in the land itself as well as a share in its expanding revenues.
I'll be back in touch when the disclosure statement is available for your review. Meanwhile, if you have further questions, please call 1-403-541-5602 or email me at cruben@rockwaterproperties.ca
