Which option is right for you?
For as long as I can remember I have wanted a place in France. Just a little plot to call home. It seemed an unrealistic dream – one that would never come to fruition. But the dream would not die. During Covid some friends announced that they had bought a home in France, sight unseen!
While extremely happy for them, I was also envious that they had found a way to make that dream come true. For a very reasonable price they had bought a fraction of a property, where they could live for five weeks a year: two weeks in high season and three in low season. They couldn’t wait to start this new chapter of their lives.
I began considering fractional ownership as well. Would this be the way to convince my husband to finally purchase? Alas no, the concept was a bit foreign for him, and a village location seemed too remote for his taste, and lack of French! Two years later he had a coup de coeur in Nice, one of our favorite cities and a place where English-speakers are hardly a rarity. We bought the first apartment we saw, not because we were negligent, but because it was perfect!
There are many ways to own a property in France, and each has its own advantages and disadvantages. For those who do not plan to move abroad permanently, you can choose to buy and rent out your property in your absence (our situation) or own with other couples who share the time, expenses and responsibilities (fractional ownership). I personally find both of these models to be greatly appealing (and still hope to own a fractional property some day as well). However, let’s look deeper at the pros and cons to each.
The Purchase Process: A comparison
Purchasing an apartment in Nice, France
Purchasing our apartment was done the “old fashioned” way – in a Notaire’s office, going through pages and pages (and pages) of documents accumulated since the property was built in the 1930s. There was a lot to learn, and I’m sure there were things we missed and didn’t understand, but we got through it and became owners!
We had to set up a bank account as well as all of our utilities, which proved to be a process! As everything is tied to a French phone number, we needed to get one of those as well. One trip to Bouygues somehow turned into three. Nothing was as easy as we thought it would be. It was a process.
Our property is subject to the French Inheritance Laws, which we will eventually have to figure out if we keep it long enough for our kids to inherit, and we are responsible for paying the three types of taxes each year: income, property and inhabitance taxes. The learning curve is a bit daunting at times!
Purchasing a Fractional Ownership Home in France
Other companies may vary, but for International Property Shares, you don’t buy the property per se, but a fraction of an American LLC, which means you are not governed by French Inheritance Laws but rather by your home country tax and inheritance laws.
International Property Shares handles all the associated steps for complete home ownership including:
- Any necessary remodeling followed by curating a tasteful décor that is in harmony with the property. You will find a well-equipped kitchen with all dishware and linens, house telephone, high speed internet, washer/dryer, and outdoor furniture if there is a balcony or terrace. Each home comes with an owner storage area as well.
- IPS is also responsible for locating a local caretaker who offers cleaning and turnaround services following the owner visits. This person is also the liaison between the house manager and any tradespeople who may be called upon for repairs and upgrades to the property.
- Since each fractional ownership property provides management, a local bank account for the property is established to pay all of the property running costs along with insurance and taxes.
- At the annual owners’ meeting each year, a detailed financial statement is provided, and the annual budget and member assessment is voted upon.
One of the beauties of a well-run co-ownership home is that larger capital expenses (like replacing a roof or the repainting of shutters) are shared by the group as a whole. For example, if a 3500 euros expenditure is under consideration to add air conditioning to a property, with an owner group of seven families, the per owner contribution is only 500 euros.
All in all, the process is much more “turn-key” than buying a property yourself. All of the bureaucracy is handled for you, and you simply purchase the share of the LLC, pay your annual dues and enjoy!
RENTAL VS CO-OWNERSHIP
We knew when we bought our property that we would want to rent it out while we weren’t there, and that we would need a management company to do this. We had done long-term rentals in Nice the year before and were very impressed with the company we chose as renters, so we reached out to them to see how it worked from the owner’s perspective.
It has been a great fit for us, but that is not always the case. Nestor & Jeeves, our management company, focuses on properties in Nice, so finding a top-notch company in other parts of France may not be that simple. In fact, some acquaintances eventually sold their place in Aix-les-Bains because they couldn’t find a suitable management company and were overwhelmed doing it themselves.
Who Handles the Upkeep? Comparing Rentals and Fractionals
Nice Apartment: We tend to spend about 3 months a year in our home, leaving the other 9 months open to rentals. As our apartment is located in a balmy climate with a sea view, it rents year-round, providing a good income. However, we do pay a management company 20-30%, which is completely worth it for us! They take care of any problems that arise (plumbing leaks, etc) on the spot, and also inventory our possessions and track any damage or theft, which fortunately, has not been a problem. Without the peace of mind Nestor & Jeeves gives us, we would not be able to maintain our property.
It must be noted that our investment was quite substantial, so the rental income hardly covers our costs for the year, and the number of renters we have varies from year to year, with no guarantees.
Fractional Home: To start with, the initial investment is significantly lower than purchasing a whole property. Then any maintenance items, the monthly utilities and taxes are split among the owner group. Owners pay an annual fee to cover these costs with a little “slush fund” for repairs that may creep up mid-year (ie: leaky pipes, a new appliance).
Every January at the annual owners meeting, members discuss what upgrades or repairs should be addressed and factored into the annual costs. Instead of taking on costly repairs alone, each couple only pays a fraction.
Reserving Owner Time
Nice Rental Home: We enjoy the freedom of knowing that we can use our property whenever we want.
There is an online calendar that we share with our management team, and we simply block off the dates when we want to use it. Our only constraints are whether or not we want to apply for a long-term Visa or simply do our 90-days out of 180 days as the government allows. Of course, the more we stay, the less rental income we earn! We also have to plan ahead a bit, as renters can book up to 12-18 months in advance. But if we decide to open up dates that we had previously blocked, we are able to do so.
Fractional Ownership Homes: Each fractional property has a slightly different format for reserving time, but it is done on a rotational basis. With a rotational calendar, owners benefit from experiencing all seasons (and festivals!) of the year.
Here is an example for a property with 13 owners (4 weeks/owner/year). Each member is assigned a letter from A to M.
If you have Letter F in YEAR ONE, you would submit your first choice of a 4-week period to the manager by the 1st of June for the following year. Letters A-E would have their choice preference before you for that booking year. The following season, your picking order would move up three notches to #3.
As the co-owners form a rather small, intimate group, it often happens that couples decide to trade times or open weeks to other owners. It should be noted that each property has a different amount of time available – from four weeks to three months, allowing people to choose a property that fits with the amount of time they want to spend in the home. Of course many owners stay at their property and then spend extra time traveling to discover new parts of France or Europe.
Emotional Investment
Nice Apartment: We happened to buy our apartment furnished, which was a great relief for us! We love the decor, and we didn’t have to spend a lot of time, effort and money choosing furnishings. We also have a little less “ownership” of things, which helps us in renting it to strangers. There is always a bit of anxiety that comes from entrusting our home to others, knowing they will probably not take the same care we do.
We keep our personal possessions locked away, and the management company does a before and after assessment after each rental, but things do experience wear and tear. If you buy a home that you do end up furnishing yourself, you may be more “attached” to your things. Or if you choose to buy very “basic” furniture that won’t show wear, renters often find it not cozy and thus not very desirable.
Also of note, we do not rent our place on “public” platforms and we have a week minimum stay. Our neighbors who have rented by the night have experienced many issues with loud guests, damages and complaints from building tenants.
Another important consideration if you buy an apartment, as opposed to a house, is that the tenants weigh in on all decisions that effect the building, and often improvements to your apartment (adding an air-conditioner, etc) Extra costs can be imposed by a majority vote, and things like hallway colors, etc. are not yours alone to make! I could write another whole post about the adventures of building meetings and unpleasant outcomes!
Fractional Home: When you share a home, you share the furnishings, bien sûr! In the case of IPS properties, the homes are decorated before the shares are sold, and every effort is made to make them homey, inviting and appealing. Any changes in decor would be at the discretion of all of the owners.
The real advantage of a fractional property is that it will be lived in by a finite number of people , all of whom you know. This can bring great peace of mind, as everyone treats the home as their own, because it is! Each property has its own area for owners to leave personal items as well.
A Sense of Community
Nice Apartment: We were drawn to Nice because of the airport, train station and “melting pot” culture where English is often a common denominator. While there are a lot of expats here, it is a large city and not as easy to meet people as in a smaller town. While it is easy for my husband to be independent, I don’t get to speak French as often as I would like because people speak English so readily.
Fractional Home: I was very surprised to find that in most of the communities where the IPS properties are located, there are a good mix or locals as well as expats from the US and the UK. In fact, many of the owners have made close friends and have found a great sense of community.
Summing it All Up
- The purchase process (and resale process) is much simpler when buying a fractional property.
- Full ownership provides great freedom, but also great responsibility: for upkeep, repairs and costs.
- Renters can provide income, but also a lot of problems in the way of noise, damage and theft.
- Co-ownership is a much smaller investment financially and on-going costs are shared.
- Both options allow for a sense of community.
It has taken about three years for me to feel fully comfortable with all of the responsibilities that our Nice apartment requires. It is a joy to stay there, but I would also welcome life in a more rural village with co-owners, as it would allow a new, stress-free experience. Let’s see where we end up
