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Ask Miranda: Fractional Ownership
Question: What do you think is a reasonable price for a fractional? That is, if you think the true market price of a property is 500.000 euros, what would be a reasonable price for a 1/13th ownership? Would it make a difference if the months are fixed?
Answer: The industry standard is to take the market price and double it, then divide by the number of shares. After that, developers make pricing adjustments differently according to fixed vs. floating and different times of the year. But before you run out and buy a property thinking the road is paved in gold, keep a few things in mind: In Paris, your closing costs can be up to 7.5%, then a renovation will run you a minimum of €2000 euros per square meter (a total luxury renovation is usually required for these projects), then all the furnishings (remember we’re not talking just furniture, fractionals require linens, towels, a new kitchen, a new bath, top of the line appliances, plates, glassware, all the little decorative knick-knacks, TVs, stereos – none of this runs cheap in France) and then there are legal fees to pay, real estate commissions , taxes to poney up……………..shall I go on?
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