Sharing Fractions and Answers to the Questions

Thanks to all of you who responded to last week’s questionnaire about Fractional Ownership. We learned a lot! And in today’s FPI, we share some of your thoughts that help us shape the fractional ownership market and in addition, I’d like to offer a response to your questions and concerns as well as confirm or deny any statements which need clarification.

(To refer back to the questionnaire, please visit Fractional Property Questionnaire.)

The question was: Please describe what you view as the pros and cons of Fractional ownership…

PROS RESPONSES

1. Lower initial cost.
2. Sharing both increase in value and maintenance costs while getting to know a neighborhood as one would if they had complete ownership.
3. Less cost if you are only going to be there a certain period of time a year.
4. Hassle-free (you don’t have to keep track of all of the maintenance and red tape).
5. Less responsibility for all aspects of ownership.
6. Cheaper.
7. Might be able to afford a bigger or better property in a better location
8. Affordable cost against the rising costs of Paris real estate.
9. Fractional Ownership is a means of having a holiday home at an affordable cost which will be well maintained.

OUR COMMENTS TO THE PROS:

You are all right! You get more property for your money. Your ownership is virtually hassle-free. There is less responsibility when ownership is shared.

CONS RESPONSES

1. Not being able to change things when you like.
2. Not being able to flexibly schedule visits at different times of the year.
3. Unable to live full time in France.
4. You can’t control the decor and have to share upholstery with other people. (i.e. other people’s stains on couches, etc.) It may feel a bit like living in someone else’s house.
5. You can’t decide to go on the spur of the moment or a different time of year than you had planned.
6. Hard to sell.
7. Communication and cooperation between co-owners with regard to costs, improvements, etc.
8. The possible entanglements of wanting to sell your share in order to purchase another property outright.
9. Need to judge when to visit; cannot visit outside ownership weeks
10. More expensive in absolute terms since need to cover costs of fractional deed, etc.

OUR COMMENTS TO THE CONS:

You are mostly incorrect!

1. Yes, you can change things. As an owner, you have the right to request changes that affect the others and do what you like when you’re occupying the apartment or home that does not affect the others.

2. In most Fractional Ownership calendars, you have the right to swap your time usage with another owner’s, so that there is built-in flexibility of the usage calendar.

3. Owning a fraction of the property does not preclude you from staying in France! You only need to find full-time accommodations outside of your fraction!

4. You CAN control the decor and you’re NOT living in someone else’s property. You’re living in YOURS! Most properties are sold furnished and therefore when you are seeking a property to purchase, you either like the decor or not — a reason to purchase it or not. And owners generally take care of their own property,and in all cases, a management staff maintains the property, including cleaning upholstery!

5. If, on the spur of the moment, you decide to use your property, you still have the option of trading time with another owner, or of course, simply booking an apartment or hotel! Naturally, this is an extra cost to you, however, if you give or rent your share, you may be able to recuperate your additional expense.

6. Shares are no harder to sell the second time around than they were the first time. Most often, the shares must be offered to the current owner base before being placed on the open market…and ask anyone who has sold their fractional share — it’s actually very easy because the transfer of the title of the shares (shares in a U.S. corporation) is simple and costs nothing — there are no taxes paid, no heavy attorney fees, nor government intervention in the transaction! Make note, however, that it doesn’t make sense to sell your share until it goes into the secondary market (when all the shares of one property are sold).

7. Communication between owners can be as easy or as difficult as the owners themselves! But if you have good management in place, then there is very little communication between owners…unless they choose to themselves! We have found, for example, that with “Le Palace des Vosges” the owners have become such good friends that they meet outside of the realm of the property very often! If the developer/seller of the shares screens the buyers, they have an opportunity to put like-minded buyers together which can form a very cohesive group of owners! (For proof of this, click here to see a video shot of the owners!: Youtube)

8. As per the answer to #6, the entanglement of selling the share is LESS than if it were a title held in France! A sale can happen in a matter of moments, rather than in three months as is a property transaction here!

9. The usage calendar is always the biggest problem. Choose a property that allows flexibility so that you have as much freedom as possible…and remember, just because the time you want is taken by other owners, this does not preclude you from visiting France!

10. The true additional expense with a Fractional Ownership property is the profit earned by the developers. The operating costs are the same as for any other kind of property, but your initial investment will be greater, simply because someone else has made an investment of their own time and money and done the work for you to develop the fractional shares. This is no different than a developer who builds a new building and sells off the units. Or an owner of a property who has invested in it over the years and sells it earning a profit. Over time, your share will increase in value as will the property.

Interestingly, most of you prefer an apartment in Paris, Nice or other city compared to a village house, manor house or château. We were not surprised by this!

And all of you responded that four or fewer people would be using the property.

For usage, 14% wanted fixed usage, 21% rotating and 65% preferred a combination of rotating and fixed usage.

For investment, 62% thought they would spend under $100,000€, 31% up to $250,000 and only 7% would spend over that amount.

For years of ownership, overwhelmingly, 77% would keep it eight years or more, while 8% think five to seven years is likely and 15% would hold on to it only four years or less. We agree, make this a long term investment for the best reward.

One thing for certain, ownership of a fraction of a good property is money better spent than if it’s cash sitting in a bank account earning about 1% in today’s world. Not only do you have the usage of the property, but you have an investment that will grow and serve you well.

Visit our Web site for more information about Fractional Ownership.

News from Moneycorp Currency Specialists

Moneycorp can now trade in 10 additional states. There are still two different types of rights on the states: the ones in which they can trade normally, and the ones in which they can trade only for incoming funds.

Incoming and outgoing transfers can be made for clients who are residents in one of the following states:
 
* Florida
* Indiana
* New Mexico
* Wisconsin
* South Carolina
 
Incoming transfers only can be made for clients residing in the following states (for clarification: we accept funds from a U.S. resident’s non-U.S. located account and return counter currency to the same U.S. resident’s U.S. based account. In this scenario, funds must not originate either from a third party or from the client’s U.S. based account and funds must only be paid to the client’s U.S. based account):
 
* California
* Massachusetts
* New Jersey
* New York
* North Carolina
* Washington DC (not Washington State)
* Colorado
* Connecticut
* Georgia
* Louisiana
* Maryland
* Michigan
* Oregon
* Rhode Island
* Tennessee
 
If you own or lease a property in France and have proof of this residency, please contact us directly to learn how this can benefit your currency transactions.

A bientôt,

Adrian Leeds
Editor, French Property Insider

Email: [email protected]

 

 

 

 

 

 P.S. Ever been to a “write-in?” Likely not, but now you can! WICE is sponsoring a weekly write-in where you can join other committed writers who want to do what they do best: write! I’m hosting the upcoming session on Monday, November 12, where I’ll be talking about what’s it like to write three newsletters a week and where, for two hours, we’re going to write our hearts out! To learn more and participate, visit WICE.

P.P.S French Property Insider is a 50-issue per year e-zine. There will be no issue on Thanksgiving Day, November 22nd and none before Christmas on December 20th. Enjoy the holidays and thank you for your understanding!