Fractional Ownership

Fractional Ownership in Paris: Small Cost, Big Benefits

Courtesy of Paris Property Group

Paris, France: For many, the dream of owning a vacation home in Paris remains just that. Perhaps they can't afford it, or maybe they think they wouldn’t use it often enough to justify the expense. Some don’t feel knowledgeable about the rental market and unsure of how to cover their mortgage and expenses through rental income. And for many, the hassle of managing property in a foreign country is simply more work than they are willing to take on.

But an intriguing opportunity in Paris real estate is addressing these challenges and giving France-lovers the chance to own their piece of Paris. Called fractional ownership, it is rapidly growing in popularity as an alternative to sole ownership of a second home.

Fractional ownership – also called shared or co-ownership – brings together a small group of investors, typically five owners to a property. Owners enjoy the capital growth of property, the rental income along the way, and a beautiful, luxurious property in the heart of Paris. At the same time, everything is fully managed behind the scenes: personal use time, luxury amenities and concierge services, property maintenance, legal and financial requirements, and rental management.

Each co-owner commits an initial cash investment of 50% of the cost of their one-fifth ownership share. Financing for the remaining half is arranged on favorable terms in advance, with no loan needed for the individual owners. Unlike a time-share, residency periods are flexible; and with only a small group of investors, owners are able to quickly make decisions about the management and ultimate sale of the property – flexibility that would be difficult or impossible with larger groups.

While the benefits could end there, co-ownership presents an even greater investment opportunity in areas where there is a vibrant short-term luxury rental market, such as Paris. Successful fractional ownership apartments in Paris are selected for their luxurious amenities and for their star location in the districts that attract the highest luxury rental demand. So, during periods not used by the owners, the properties are rented to generate income, which can completely defray the costs of ownership and even provide owners with an income – again, with someone else taking care of all the details. The projected result is that, with up to three weeks use of the property, an owner will realize an annual income from the rental that is more than his or her contribution to the mortgage.

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