Rental Property Investor · Tyler, TX · Member since 2019 · 72 posts · 39 votes
I've been investing in the States for years now and my wife and I have a goal of owning a house in Bordeaux, France (we went on a trip there just before I proposed and we loved it).
What are the similarities and differences in buying properties in different countries?
I don't know if such saying exists but I'd agree to it.
However, I have been investing internationally for a few years now and I totally disagree with your assertion that "investing in the US makes much more sense due to better pricing, cash flows and landlord-tenant laws" (which is can be partially true depending on which US state you compare with which foreign country and what strategy you follow).
Making generalizations like that is generally very unhelpful, especially when they are based on discussions that you've had with one single person (as opposed to your own experience or that of many other people). If you had to to a more scientific comparison based on facts and figures and/or investing internationally yourself, you might come to a very different conclusion.
I'll give it to you that it's much easier and it might make more sense for many if not most US-based investors to invest in the US. However, it's investing 101 to not put all your eggs in one basket and international investing can be a great way to diversify. In my humble opinion, we shouldn't look at one versus the other but rather at one in addition to the other.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
There's that saying that goes "live where you want and invest where it makes sense." A friend, Billy Keels, grew up in the US but has lived in Europe for well over a decade, including France and Spain. From discussions with him, the US makes much more sense due to better pricing, cash flows, and landlord-tenant laws.
Although he lives in Spain, he syndicates properties back in the US because despite the headaches involved, it still makes more sense to buy in the US.
He is not active on BP, but I highly recommend you Google him and connect. Great guy.
@John Corey has expertise in this area as well, although I believe more in the UK.
On the other hand, I would love to own an investment property in northern Italy. So I definitely appreciate why this is of interest. I just think that being in Tyler, TX your money will grow a lot faster at home, then you can vacation in whatever part of France you want.
I don't know if such saying exists but I'd agree to it.
However, I have been investing internationally for a few years now and I totally disagree with your assertion that "investing in the US makes much more sense due to better pricing, cash flows and landlord-tenant laws" (which is can be partially true depending on which US state you compare with which foreign country and what strategy you follow).
Making generalizations like that is generally very unhelpful, especially when they are based on discussions that you've had with one single person (as opposed to your own experience or that of many other people). If you had to to a more scientific comparison based on facts and figures and/or investing internationally yourself, you might come to a very different conclusion.
I'll give it to you that it's much easier and it might make more sense for many if not most US-based investors to invest in the US. However, it's investing 101 to not put all your eggs in one basket and international investing can be a great way to diversify. In my humble opinion, we shouldn't look at one versus the other but rather at one in addition to the other.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
@Mike Lambert I'd love to hear about your experience investing in the EU. I think it would be awesome and success stories would be great to hear. My preference for US investing isn't based on input from just one person, it's input from quite a few people with experience in the US and EU, many of these folks I've had on my show. I'd love to hear your experiences and why REI works in the EU from overseas, that is the purpose of this thread after all :)
Seriously, don’t get me wrong. Some deals are better on both sides, which was actually my point of saying the US is certainly not uniformly better as a generalization. Also, as you know, think like tenant laws vary between countries, as they vary between states. As you rightfully mentioned, laws can be tenant-friendly but I don’t really care because I focus on short-term rentals.
Imagine you get a 100% mortgage for 50 years at a 1% interest rate and then rent short term. You’re basically use ECB free money to print money of your own. Imagine the returns. And then, most of the time, you’re interest rate is EURIBOR + the bank’s credit margin. EURIBOR is negative and, when it’s lower than your credit margin, your interest payment is negative. And this happens. Banks basically will pay you to hold your property.
Can you get anything like that in the US? I don’t think so and the FED made it clear you won’t anytime soon, if ever.
Granted, not everybody has access to lending terms as favourable as that but, even for those who get slightly less favourable terms, it’s a run. Also, if you’re 65, you don’t be able to get a 50-year mortgage.
At least Portuguese, Spanish, Italian and Greek banks lend to foreigners. Only residential, meaning you have to qualify based on your salary, not the potential income of a property. There could be restrictions like a limitation to a second residence, whereby you might not be able to get loans for multiple properties.
Investor · London · Member since 2017 · 160 posts · 82 votes
6y
@Mike Lambert thanks for all the great info you shared here. Re those EU banks, do you know how deeply they dive into one's salary? For example if I have income that is made up of some passive source as opposed to pure W2, do they discount that? Do they use a US tax return to vet the income or pay stubs? I can also research this separately but in case you knew off the top of your head. Love this thread!
Your welcome. I suspect they'd want a salary slip but some banks might be more flexible, especially if they're looking for business. They could ask for your tax return and your credit score. They'll assess your risk as a local bank would do but, if anything, they'd normally be more stringent for obvious reasons.
Rental Property Investor · Tyler, TX · Member since 2019 · 72 posts · 39 votes
6y
@Mike Lambert Thanks for your insight. Am I correct in assuming that the 50yr / 1% int terms you mention are legitimate lending terms provided in the EU? If I wanted to learn more on this topic, where should I start?
The purchasing process is 2 steps with the notary, a kind of pre contract and the real contract. Between the 2, you have 7 working days where you could decide to cancel the transaction without any fee
The process to buy will probably last 1 to 3 months, 3 months especially if you take a loan with the bank. As you are foreigner, the bank will probably ask you to pay 20 to 30% of the house you want to buy. Loan will be probably 15 to 20 years, over 20 years are quite rare in France.
if you buy for you to live in the place, every year, you will have to pay a kind of Living tax (taxe d habitation). It s supposed to be cancelled in 2023, but with Covid, not so sure they will keep their promises. The amount is defined by each city so i cannot let you know how much it will be. If you rent, it will be your tenant to pay. On average in Bordeaux in 2018, it was 780 euros
you have also another tax named taxe fonciere. this is landlord who pays it. it depends again on each city. this tax is paid by landlord. i have a small appartment in Bordeaux, 40m2, i pay about 750 euros last year for this tax
At least Portuguese, Spanish, Italian and Greek banks lend to foreigners. Only residential, meaning you have to qualify based on your salary, not the potential income of a property. There could be restrictions like a limitation to a second residence, whereby you might not be able to get loans for multiple properties.
As for Spain, the risk lies in the incredibly slow pace and inefficiency of legal proceedings, including foreclosure and tenant eviction. Just to give you some idea:
- Evicting a non-paying tenant, or squatters may take 12 - 18 months, maybe more time if things go really wrong. In Spain, depending on who is illegally occupying a property, you may even find random and unrelated people demonstrating at the place when police go there to try to evict them; they try to stop evictions.
- For a bank, foreclosing on a mortgage and getting posession of the mortgaged property may take 5 - 6 years.
This is the timing for an auction I am following in Madrid:
1) Bank goes to court to foreclose on the property in 2015.
2)By September 2018 the property is listed to be auctioned.
3) The auction results were contested in 2018, appealed. As of today, the property is still occupied by the non-paying "buyers", the ones who stopped paying the bank, and the property is still in the middle of a legal battle. After 5 years, nothing is solved, nothing has changed = they have been living for free in that property for 5 years.