So you've seen the light and are thinking about sharing ownership of a boat, car, or some other infrequently used asset. Great! But what happens when you all want to use it at the same time?
Shared ownership (a.k.a. fractional ownership) is the only way to avoid paying for 100% of an asset that you use only 20% of the time, while still holding equity and not renting. It's a great way to own anything from a vacation home to a lawn mower. There are lots of different ways to get into fractional ownership ranging from having a management company set it up and run it for you (common with big ticket items), to a do-it-yourself approach. Regardless of how it's set up, one of the first mental roadblocks that people hit once they seriously consider shared ownership is the simple question, "What happens if we all want to use it at the same time?" Enter the need for a scheduling or reservation system. Without some type of system in place (whether it's manual, or software-based) the answer tends to be "we'll just work it out". While this may sound like an appealing approach, especially for partnerships that are started between good friends, it almost invariably leads to conflict and resentment – not what you expected to get out of shared ownership.
First, Some Requirements
Over the years, asset-sharing partnerships have used quite a few approaches to allocate usage of their shared asset, with some working better than others. But before getting into the details of how to do it right, let's start with some requirements:
1. It should be easy for everyone involved to keep track of who's using the asset when.
This is kind of a no-brainer. Without this, you have utter chaos. Partners should be made aware when someone reserves the asset, and there should be some centralized mechanism for partners to see when the asset is reserved and when it's available next.
2. The system should prevent partners from scheduling over each other.
Another no-brainer. It's not really a "reservation" if it doesn't prevent others from claiming the same time slot. Again, without this you have chaos.
3. The system should prevent partners from scheduling more than their share of time in advance.
Whatever system is in place should ensure that each partner is not scheduling more usage than they're entitled to, based on their percentage of equity in the asset. Without this, an individual partner could easily monopolize the shared asset at the expense of the other partners.
4. The system should allow for unlimited last minute usage if the asset is available.
In the interest of making full use of the asset, it wouldn't make much sense to have it sit idle if someone is ready to jump on it at the last minute.
5. The system should have a fair and consistent answer to the central question – "What happens if we all want to use it at the same time?"
Unless you've agreed to a static schedule in advance (which fails miserably at #6), there will definitely be occasions when more than one partner wants to reserve the same time slot. The system should have a better answer than whoever gets there first wins.
6. Bonus: The system should provide an experience that is as close as possible to sole ownership.
This is a bonus requirement because an asset-sharing partnership can be successful without it, but it can make a world of difference in how much frustration comes along with the benefits of shared ownership. In an ideal world, you pay for a fraction of an asset and you use it whenever you want or need to. You shouldn't have to plan your life around when you're going to use your asset. It should feel like you're the only owner, except when it comes time to pay the bills.
So, with these requirements in mind let's take a look at some common scheduling approaches. The options generally fall into two categories – static scheduling, or flexible scheduling.
With static scheduling, the partners agree in advance to a set schedule that never changes. It might be that partners alternate weeks, or one partner gets weekdays and the other gets weekends. There are infinite variations, but the results are the same. You end up scheduling your life around your asset. For something like a vacation home, this approach might be suitable. You generally don't take vacations whenever the mood strikes you so planning around your static block of time isn't that difficult. For something like a car however, this is much less realistic and it starts to feel like your car owns you and not the other way around.
With flexible scheduling, partners are able to reserve available time without having to agree to a fixed schedule in advance. Generally, flexible scheduling solutions provide an experience that is much closer to sole ownership. The main drawback to flexible scheduling is that it's more complicated than static scheduling, and if it's not done right it can lead to friction between partners, and potentially a messy and costly dissolution of the partnership.
Flexible Scheduling Options
There are plenty of options available to implement a flexible scheduling system, some better than others. Here are a few of the more common approaches:
"Working it out"
This approach tends to be common in partnerships that are started between friends, and typically means that when you want to use your asset you call the other partners and let them know. If there are only two of you in your partnership and you're close friends or family, this may work out. However, this approach has the highest probability of failure and of ruining your friendship. The problem arises when another partner says, "me too." Now what? Without a fair and consistent process for making decisions in these cases it comes down to whoever is the most persuasive or yells the loudest – not the shared ownership experience you were hoping for. This approach fails to meet any of the requirements from the above list, and should really be avoided.
The next step up from "working it out" is to use a shared Google Calendar. While this is a step in the right direction, and at least provides a way for partners to keep track of who is using the asset when (#1), it doesn't do anything to prevent partners from scheduling over each other (#2), or more than their share of time (#3). It also leaves it up to the partners to decide what happens if more than one partner wants to reserve the same time slot (#5). Granted Google Calendar is free, but it's not that much better than just "working it out".
Simplistic reservation systems
There are quite a few options available when it comes to online reservation systems that are designed to simply block time for some shared resource. All of them provide the basics like a shared calendar (#1) and the blocking of time for reservations (#2). Some of the better solutions will even provide quotas for each user to ensure that an individual doesn't schedule more than their share of usage in a given time period (#3). However, because these systems are general purpose scheduling systems they fall short when it comes to dealing with the specifics of managing a shared asset, like distinguishing between reservations made in advance and last minute reservations (#4). Finally, their approach to dealing with cases when more than one partner wants to reserve the same time slot is first-come, first-served. While this does provide consistent results, it's far from fair. Should a partner be able to reserve a time slot when they've already used the asset more than anyone else simply because they woke up earlier and made their reservation first?
Basic shared ownership management systems
Now we're getting closer to a workable solution. There are just a handful of applications that are targeted specifically at managing a jointly owned asset. All of them provide reservation systems and additional features like management of finances and collaboration features. Some are specific to a certain type of asset, like a boat or airplane, while others are customizable to work with any type of asset. Some provide just the management tools, while others go further to help potential shared owners find partners and set up their partnership. When it comes to reservations, these systems have an answer for each of the requirements. They all provide the basics (#1-3), and most allow for unlimited last minute usage (#4). They also have a decent answer for dealing with cases when more than one partner wants to reserve the same time slot (#5). One common solution for this requirement is wait listing. With wait listing, the first partner to reserve a time slot is granted the reservation, but the system still collects additional reservations for that time slot and creates a waiting list. In the event that the first partner cancels their reservation, the next partner on the waiting list gets the time slot. This is a step in the right direction, but it's really just first-come, first-served with a twist that only makes a difference when a partner cancels a reservation. Another common solution is to offer trades or purchasing of a time slot. With this approach, the first partner to request a time slot is still granted the reservation, but other partners can now offer to trade another reservation for the one in question, or can offer to purchase the time slot with either cash or virtual "credits". The drawback with this approach is that it puts the holder of the first reservation in the position of having to directly grant or deny another partner's request, which can result in friction and resentment between partners.
Sophisticated shared ownership management systems
Here's where the list of options gets very short. A sophisticated system has the right answers for all of the requirements, and provides a scheduling experience that is as close as you can get to sole ownership without actually paying for it (#6). The key to doing this is how the system handles requests for the same time slot (#5). A sophisticated reservation system gets away from first-come, first-served entirely and instead makes intelligent decisions to eliminate scheduling conflicts before they can happen. This is done by separating the reservation process into two steps. The first step is figuring out how many partners want to use a given time slot – essentially collecting demand. This step is triggered when a partner requests the first reservation for a given time slot. Instead of granting the reservation immediately, it is held in a pending state for a short time while the system notifies the other partners of the pending reservation. Other partners who want to reserve that time slot can do so while the reservation is still pending, which triggers the next step in the process. In this step, the system makes an intelligent decision about who should get the time slot in question by analyzing each partner's past and future scheduled usage. The time slot is then given to the partner who has used (or will use) the asset the least – the fairest possible outcome. Some systems will even apply a weighting factor to more recent usage to try to spread time more evenly among partners. This two-step reservation process results in the least friction possible between partners because it is the system that makes the reservation decision instead of an individual partner. With this strategy, partners can even go as far as giving up on scheduling reservations in advance and just reserve their asset whenever they feel the urge, relying on the system to ensure fairness. This is as close as it gets to owning the asset yourself.
So, if you're considering shared ownership, or are already sharing something, make sure you have the right tools in place because they can have a significant impact on your shared ownership experience. Resist the urge to go with a free or cheap option and seriously consider going with a purpose built solution. You can expect to pay a modest monthly fee for these services, but it's well worth it to ensure that you get the best shared ownership experience possible.