Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
Does anyone have experience owning property in France? My sister in law is looking into it and asked me for advice, but I know very little about the process of buying and selling in France as an American. She’s been living in Paris for a year now (Montmartre), and she’s just sick of renting and is talking about buying. She’d be looking in that market (Paris). She has a year left on her student visa, and is uncertain on how she’d be able to continue living in France after that. Any general info on owning RE in France as an American appreciated! Thanks in advance.
Rental Property Investor · Barcelona, Spain · Member since 2018 · 38 posts · 22 votes
6y
@Joaquin Camarasa, asking prices in Spanish main cities have been overvalued for a long time already... I think the recent adjustments we are experiencing on Idealista and other portals do not reflect yet the market reality, but people are just trying to revert prices back to what the "fair value" should have been a few months ago.
The market is frozen so far and sellers are holding their breath for a while, waiting for more clarity to come soon. Desperate sellers may have been adjusting prices more aggressively, but I don't think this is happening widely yet.
By the way, the Bank of Spain (BoS) has officially requested surveyors to adjust their valuations down on a preventive 10%. If current buyers ask for an additional 10% reduction due to "covid" or any bargaining reason they may have, prices could effectively go down ca.20%.
That being said, my gut feeling tells me that as soon as the covid situation eases, prices will increase again, at least for a while. Think of it: interest rates are on historical lows and many investors are afraid of stocks, so they have to allocate their excess cash. Plus, man is the only creature to trip over stone twice...
In my view, the real "blood on the streets" will be seen in 12-18 months when people currently furloughed will be officially unemployed and unable to service their debts. Then the "short-term demand shock" in the economy will again be a risk for financial institutions, and I think the story should sound familiar to some of us...
But I might be completely wrong, of course. The truth is nobody knows, but I just spoke yesterday with a colleague from the Bank of Spain and they pretty much are expecting a foreclosure fest in 2021-2022.
Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
6y
Steve K - have her google an expatriot American group or the US Embassy there. There's a ton of American groups throughout Europe for people that have moved there.
Steve K - have her google an expatriot American group or the US Embassy there. There's a ton of American groups throughout Europe for people that have moved there.
Investor · Barcelona & Valencia (Spain) · Member since 2017 · 322 posts · 177 votes
6y
@Robin Morales, Spain is an interesting option because in general the prices are lower than countries as the US or the Netherlands (where I am originally from) for very decent properties. Also cultural and country-wise it is a very attractive option.
The point though is that in the bigger cities the rental yield is not that high because the rents are not linearly increasing with the prices of properties. 3-7% is where people are already satisfied with. That is why other (smaller) markets or more creative ways are needed to boost yields.
One of them is Airbnb, which also we are using in Barcelona. However, the thing to keep in mind is that it is getting harder in bigger cities to get a vacation rental license to do so.
Investor · Barcelona & Valencia (Spain) · Member since 2017 · 322 posts · 177 votes
6y
@Robin Morales, that all depends on your background of course, but normally foreigners can get financing as simple as if you are living in Spain. The only thing to keep in mind that the LTV you could get is dropping from 80% (inhabitant of Spain) to 70% (foreigner). Talking with mortgage brokers could change positively/creatively though. If you might ever seriously considering buying in Spain, we would help you with our trusted mortgage brokers contacts.
Flipper/Rehabber · Mansfield TX · Member since 2016 · 16 posts · 0 votes
6y
@Erwin Groenendijk - I would be interested to take you up on that offer some day. I'm a ways out though before I get there. I have several other endeavors in and out of real estate that keep getting in the way. But str investment in Spain is the pipe dream. Erwin, just curious, where would you start if you were me just beginning your investment out of the country (USA) in Spain?
Rental Property Investor · Barcelona, Spain · Member since 2018 · 38 posts · 22 votes
6y
Hi Colby, Erwin will surely provide you with excellenyt insights, but if I may, I would suggest start looking for a relatively liquid market (large cities like Barcelona, Madrid, Valencia...).
Why? Investing from overseas might mean you have, on paper, less local knowledge and limited direct contact with what is going on in that specific market. You can possibly find better deals with higher ROIs in other locations, but if for any reason, you may need to exit the property earlier than expected, you surely want to find buyers for your porperty at a fair value. Demand for properties in alternative locations may dry up very quickly, leaving you with an unwanted asset that you may find challenging to sell if the market turns sour.
Factor in as well that unless you travel often, you will have to rely on trusted local partners such us property managers, lawyers, etc. You will find more of them in large cities too.
In addition, I would focus on properties which have great potential to be rented quickly. These might not always be the best property in the best neighbourhood you can find, but the ones that tick many boxes for potential tenants. Keep in mind average salary per person, credit availability and other demographic metrics for the region.
In the end it is all based on your local knowledge and contacts of course. Don't worry about this though, we can help you with this too. Spain is a different country with its own regulations as opposed to the USA where you can invest in other states of the country and still more or less having the same guidelines and contracts to be used (this is what I assume by the way).
Just to add - base everything on your investment strategy. Buy-to-rent, fix-and-flip, multiple units or just 1/2, etc. What is your plan?
Investor · Barcelona & Valencia (Spain) · Member since 2017 · 322 posts · 177 votes
6y
He @Joaquin Camarasa, quite some insecurity in the market. We managed to pre-sell a property in Valencia and one of the buyers of a property in Terrassa just outside of Barcelona pulled back. Prices are dropping for at least 10%, for which if not already adjusted on Idealista, just know that this is happening.
Like they said on the BP podcast, probably the prices that haven't dropped yet will drop in the upcoming months when it is really getting hot under the feet of homeowners. We are for example willing to accept offers or -10% at the moment.
Real Estate Agent · Springfield VA · Member since 2018 · 479 posts · 400 votes
6y
@Erwin Groenendijk I was checking idealista, glad you mentioned another reality. In the area I am in, Washington DC, I am noticing the same thing, less competition and sellers willing to accept 5-10% discounts, depending of the property and area, of course. There is not much supply though. I am under contract in a property that it sold for 10% higher a month and a half ago, buyer lost his job and financing fell through. The numbers worked so I went all in. Closing in two weeks and starting the rehab the day after. DC is in theory “recession proof” due to the government jobs and the industries here. However, I do think there will be a little drop in prices at some point.
I’ll be keeping an eye in Valencia, prices sadly should be dropping more since the industries are more dependent on tourism.
I was planning to get there this summer but with the rehab I decided to stay and keep an eye in the contractors.
Rental Property Investor · Barcelona, Spain · Member since 2018 · 38 posts · 22 votes
6y
@Joaquin Camarasa, asking prices in Spanish main cities have been overvalued for a long time already... I think the recent adjustments we are experiencing on Idealista and other portals do not reflect yet the market reality, but people are just trying to revert prices back to what the "fair value" should have been a few months ago.
The market is frozen so far and sellers are holding their breath for a while, waiting for more clarity to come soon. Desperate sellers may have been adjusting prices more aggressively, but I don't think this is happening widely yet.
By the way, the Bank of Spain (BoS) has officially requested surveyors to adjust their valuations down on a preventive 10%. If current buyers ask for an additional 10% reduction due to "covid" or any bargaining reason they may have, prices could effectively go down ca.20%.
That being said, my gut feeling tells me that as soon as the covid situation eases, prices will increase again, at least for a while. Think of it: interest rates are on historical lows and many investors are afraid of stocks, so they have to allocate their excess cash. Plus, man is the only creature to trip over stone twice...
In my view, the real "blood on the streets" will be seen in 12-18 months when people currently furloughed will be officially unemployed and unable to service their debts. Then the "short-term demand shock" in the economy will again be a risk for financial institutions, and I think the story should sound familiar to some of us...
But I might be completely wrong, of course. The truth is nobody knows, but I just spoke yesterday with a colleague from the Bank of Spain and they pretty much are expecting a foreclosure fest in 2021-2022.
Investor · Barcelona & Valencia (Spain) · Member since 2017 · 322 posts · 177 votes
6y
@Joaquin Camarasa understandable, good luck with the project. The best thing is to now have a longer period rehab and not having to sell.
@Javier De la Rosa, following your explanation except for the point why you think that in 12-18 months the real impact is going to hit with unemployment etc. You think that around that time the economy will really feel the impact of the last 2 months coronavirus and government support?
As I said, I may be totally wrong, and economists are always said to be good only at predicting the past...
I think the common approach of considering Covid-19 as a short term shock is misleading. On one side we have financial markets and on the other side we have the real economy. Financial markets have been very pleased with the measures taken so far in the US (not so much in Europe...) and have rebounded pretty quickly. Let's remeber that financial markets have been artificially boosted for a long time...On paper, the value today of a stock has to reflect the future cashflows of a company. That is not hapening at the moment, as valuations are too high considering the damage in the economy in the next 12 months. Big companies are unable to forecast their future sales and even refuse to publish them because they have no clue (can't blame them). If they can't, how could investors?
And what about the real economy? Well, the "2 months" shock has disrupted supply chains worldwide and is stress testing every single business, no matter how small or large. The key is the shortage in liquidity: if they can't sell, they can't pay their staff, suppliers, taxes, banks and so on. Even if the economy is back to normal in 2 months time (which I doubt), many companies suffering right now liquidity issues might be unable to reopen. So these jobs are gone.
Some countries might be better prepared than others and the US seems to be taking the "right" measures.
The Spanish government has not taken enough measures. I could elaborate more on that, but it would be too long and too boring. Simply put: many employees have not received yet their unemployment benefits and many business owners have had no access to all the promised funds, therefore they will shut down. It is true though that the Spanish problem has a lot to do with the EU as a whole...
But if Spain is to have unemployment at ca.20% (as the IMF and BoS are projecting), well, I find it difficult for all those unemployed people to repay their mortgages.
On a positive note, the financial system is much better prepared than it was in 2008 and politicians are reacting faster than they did then, so perhaps the consequences are limited after all.
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
6y
@Erwin Groenendijk Thank you for all the insights. Barcelona, and the Riax Bias region are on My wife's and my acquisitions list for sure! So this was a super helpful thread!
Does anyone out there have similar experience or insight with Scotland? I'm looking to understand what the limits or regulations around buying property in the Edinburgh, and Oban/mull areas are.
Investor · Barcelona & Valencia (Spain) · Member since 2017 · 322 posts · 177 votes
6y
@Michael K Gallagher, happy to help. We chose for a clear reason to move from the north of Europe to the south though, and that is escaping the bad weather out there ;-). Scotland is not my nor I think of most others here specialization. If you do find good deals out there however, let us know. I know that the north of England can provide decent yield returns on rentals deals, that might give you a direction.
Rental Property Investor · Eindhoven · Member since 2018 · 8 posts · 1 vote
4y
Hello @Erwin Groenendijk I am interested in properties in Barcelona and can you refer me to banks working with international expats ? I am from the Netherlands