Anyone buying in France???
Investor · Paris, France · Member since 2017 · 7 posts · 9 votes
Anyone buying in France???
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@James Wise I saw the thread but I am a bit skeptical on whether it is real. My reading is an american living in Italy without paying rent (to the government providing him lodging). Although I agree that the US RE market is overall better (that's why it also attracts lots of foreign investments), I also think the US local markets I've been watching are overpriced at this time which makes a new investment risky.
I'd like to react to your comment of international investment being "wild": Since this thread is about France, I'll use the french RE market. There are millions of RE investors in France and although the government has a twisted version of socialism, it kind of functions. There is a free market of buying/selling properties and values go up and down based on offer/demand principles and what you can rent them for. Clueless governments over time have added rules to "help" tenants for political reasons such as rent control, then more rules to avoid tenants abusing previous rules leaving a relatively complex system that no new government has the guts to really cleanup (BTW the city of Seattle is trying to go down the same path, clueless politics know no borders).
Now, if there are still millions of RE investors, they must make some money somehow otherwise they would all park their money abroad or in commercial RE, leading to residential prices dropping. If you study the local rules or connect to a team of people who know them, you can figure out what works and what doesn't. For France, consider a few examples to offset the pro-tenant environment:
- Government gives a bunch of tax breaks for investors in new constructions if you rent them out for a given number of years.
- Many tenants including most students are eligible for the equivalent of section 8 in the US (without the site inspections), that's part of the rent guaranteed for the landlord.
- There are rent insurances: for ~3% of rent cost, they are supposed to pick up the tab when the tenant doesn't (I haven't had to use it yet but I factor it in my ROI calculations when I run my numbers before I make an offer).
- You can get subsidies for rehab, government will pay up to 30% of the bill (labor+material).
- You can rent your property to a subset of the government. Government will pay your rent for an agreed number of years, take care of everything including finding tenants and kicking them out if needed and return the place to you in good condition at the end of the agreed term. Hands off approach.
- Appliances typically not included => Harder for tenant to move out and less maintenance calls/cost for the landlord. That's also why Europe has smaller ovens, fridges and washing machines :-)
- Mortgages at 1.x% fixed rate. Sometimes no down payment. Rehab cost often included in the mortgage.
My point is that once you learn how to navigate the system, it is not that wild, just different. Whether you want to tackle a foreign market is the same thought process as deciding which area you want to invest in within the US: you consider population migration, local economy, risk factors, tax implications, local laws and don't just judge on a few horror stories.
A significant difference France vs US is that there is no MLS system so it is harder to assess the market and you really have to rely on local experts or work harder through listings and site visits. If the market is harder to assess for the buyer, it is also harder to assess for the seller... A few scary stories can actually help making good deals by keeping away investors who don't fairly assess the market.
47 Replies
- Maura Covaci do you rent these long term or do short term rentals (like AirBnB)? My wife and I have been talking about it mainly as a vacation home for us but would like to rent it short term when we are not using it.
- Investor · Paris, France · Member since 2017 · 7 posts · 9 votes9y
Hello Percy,
The one in Paris is rented long term on airbnb. For example this year I am renting it for 4 months from January to may, then for a month in july and for 4 months from September to December. This way I can have it available in August if family from the US wants to come over and use it.
I have two apartments in the south of France that are rented on long term contracts. The maintenance of these is done by a leasing company and I cannot use these in the summer.
There are some contracts that you can do in France where you can lease an apartment for 9 months. This is usually done for students, so that they can leave during the summer. This would be perfect for what you are looking for.
- Investor · Paris, France · Member since 2017 · 7 posts · 9 votes8y
Hi Percy,
I had one apartment that I was doing Airbnb with in Paris but I decided to just rent it out long term this fall.
There are some companies that manage Airbnb here in Paris but I have not personally used any of them.
I can ask around and get some recommandations and ill get back to you.
Are you looking to buy something in Paris or elsewhere in France?
- Investor · Paris, France · Member since 2017 · 7 posts · 9 votes8y
Hi Shawn,
The laws are pretty tight in France regarding evictions however the loophole is renting a place furnished. If you rent it as a furnished apartment you can get people out in 3 months. Furnished dosent mean everything just the basic things like a bed, sofa, fridge, etc. It dosent even have to have a washing machine for example. If you have any specific questions let me know.
Hi @Account Closed Another option to avoid eviction is to get insurance for unpaid rents. It usually costs around 3% of the rent or if the tenant qualifies the government can guaranty rent payment free of charge (called "visale" - fairly new though). It is certainly not perfect but it helps avoiding the eviction path.
- Rental Property Investor · San Jose, CA · Member since 2015 · 34 posts · 8 votes8y
I am planning on grabbing up a property if possible in france as well. I live just outside paris at Le Vesinet - look at maybe Vincennes or Rueil mal Maison :) do you speak french? I've been here a year.
Leaving it furnished would be easy for me because i would want to leave my fridge, washer/dryer, beds, couch, etc. all nice, new ikea stuff too
- Investor · Paris, France · Member since 2017 · 7 posts · 9 votes8y
Hi Federico,
I have experience buying in France if you need any advice. The interest rates are really low right now so if you can get the bank to give you a loan with little money down you should go for it. I have been getting 0% down with interest rate between 1,2% and 1,8% for 15 years for small investments. Definitely go for it because you dont find deals like this in California!
If you are interested in talking more I live in Paris and can always meet for a coffee!
- Hi Maura, I am a California resident and landlord/investor, I get to Paris often for work. Generally How is the RE appreciation in Paris as well as rental market? Also how easy would it be to exit investments (sell) in a few years or would it be best to think of a long term buy and hold?
- Member since 2018 · 1 post · 0 votes8y
Hi @Maura Covaci,
We are from the UK and in the process of buying our first property in France, in Marseille. We are
buying it as a second home but we would like to buy another one as an investment. Do you know who we can use to get 100% mortgage as a foreigner?Thanks
- Investor · Van Nuys, CA · Member since 2014 · 6 posts · 2 votes7y
Hi Maura,
We have been looking for something in France for several years, but not finding anything that we want to put that much money down on. We started looking in Paris, but with the prices so high, it isn't much different than investing here in Cali.
We've started to look in the Languedoc region, not too far from your Marseille properties. We were thinking somewhere near Narbonne due to its proximity to both the sea, the mountains and Spain. Would end up renting it out short-term rental (Airbnb style) and using it for a vacation home at different times of the year.
Do you know of any agencies that work that area? I know they don't have anything similar to our MLS, but if you've got any suggestions on how to better review the properties, we'd love to take a look at them. Also, would you suggest a free-standing home or something more like an apartment/condo?
Also interested in finding something small that might be run as a full-on BnB or small hotel, Either with gites or several bedrooms if you know of anything like that.
Any input you could provide would be appreciated!
Jeff
- Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes7y
Hey all! Happy to have found this thread, @Account Closed thank you for starting it. How are your rentals doing?
Good to know of other BP members interested in France! I've been living in Aix-en-Provence (near Marseille) for the past two years. I'm a dual citizen (French American).
Now that I've gotten settled in I've been looking at flipping properties in Marseille in some of its up-and-coming areas that are seeing economic development and real estate appreciation.
Maura do you know of any agents in the Marseille area who work with investors or are savvy with rehab projects?
- Los Angeles, CA · Member since 2018 · 95 posts · 46 votes7y
@Alexis Schreier
Flipping properties in France will be challenging.
You can find deals here and there for sure, but the taxes will kill you. Between 5% agent commissions, notary and transfer taxes around 8-9% short term capital gain and csg crds social taxes it will be hard to make any profit. They are designed to discourage this kind of business. Not sure if you re aware of that but if you plan to buy and sell multiple times a year you will have to be registered as a professional with all the tax consequences that it implies.
In France most of the real money in real estate is made in new developments because of its attractive VEFA program and near free cost of money , but it’s not a beginner play.
Furnished rentals can also be very attractive. If you can purchase with little money down, with near free money your cash on cash can be massive
My family owns several brokerages in Aix en Provence and marseille; hit me up if you want to connect
- Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes7y
@Account Closed thanks for your reply. Yes I'm aware that there will unfortunately be many additional costs compared to the US as well as differences in financing options. And that if you flip properties repeatedly in France you need to register as a "marchand de bien" which has different tax implications. Challenging for sure, at this point I'm just trying to figure out all the costs involved in this type of transaction in order to build a financial model to see if I can find deals that make sense.
I'm going to be living in France for at least another year but have plans to move back to the US after that so I was thinking of flipping rather than buy and hold, but if flipping turns out to be too difficult I may look into buy and hold.
I'll be sending you a DM, thanks again!
- Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes7y
- Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes7y
@Maura Covaci
How is the Mediterranean coast of France for investments? Ive been interested in that area for my own personal living. My daughter (6 years old) aspires to live the posh lifestyle in Paris, so I have to buy a place in Paris now... how’s the market?
- Los Angeles, CA · Member since 2018 · 95 posts · 46 votes7y
Originally posted by @Nick Rutkowski:
@Maura Covaci
How is the Mediterranean coast of France for investments? Ive been interested in that area for my own personal living. My daughter (6 years old) aspires to live the posh lifestyle in Paris, so I have to buy a place in Paris now... how’s the market?
Investment wise the market has been quite soft the past years on the mediterranean coast; The Nice, St Tropez and Cannes areas remain the most sought after. You can make good money with vacacion rentals if you can finance, but don't expect massive appreciation in the foreseable future. Imo Ibiza and Majorca are better and safer investment.
Paris now is a different market; anything below 1m sells very quickly; above that, not so much.. many big pricey apartments lingering on the market. Decent apartments in good central areas sell for about $1400 a sqft
Even though i'm french i consider France now as a high risk place for investment and advise to stay away from that market; very serious political unstabililty and real possibility to see the far right of communists (which share pretty much the same economical agenda) win the next elections. That scenario would lead to the collapse of the economy and massive capital flight. A fiscal onslaught for property owners is very likely if any of these scenario happens
I would advise you to look into Portugal or Spain as alternative
good luck!
- 7yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Account Closed my girlfriend and I will be there in early march and are interested in investing overseas. Want to grab espresso?
The Moorhead Team5140 Reviews Hi everyone in France!
I'm looking into buying a small property (studio) with my brother in Montpellier. The goal is mainly to rent it long term, and if it works out well, buy a second one (and more) in the south and repeat the process. This area because we'd likely spend our retirement there!
We are from France but not resident there anymore (one in Switzerland, one in Asia). We're looking into creating an SCI to make it possible for us to buy and make tax and management simpler. My brother already have 2 properties in Switzerland.
If anyone would know more about the Montpellier area and have suggestions, I'd be happy to connect!
- Cannes, Provence-Alpes-Côte d'Azur · Member since 2019 · 5 posts · 4 votes7y
Hi.
We bought a second home property outside Cannes last year. Love the area, and the lifestyle (and the vacation rental opportunities).
We bought our house as an SCI (a share based company type only with the purpose of jointly owning a property with someone) it comes with some benefits of course but the interest rates from the bank became slightly higher.
The process of buying as a foreigner was painful, mainly because of the financing piece with many turns with the bank who requested a constant flow of documents during a period of 3 months to determine our credit score. Of course all doc’s needed to be translated to English or French as well (I’m Swedish). But all went well and was worth it in the end.
Anyone interested in knowing more about that let me know if I can be of any help?
Now we’re starting to look into investing in a flat or small house for air bnb in Nice/Antibes/Cannes area.
I am hearing that some cities in France have implemented regulations for short term rentals, such as in order to rent something short term you need to also provide a long term rental.
Not being French myself nor speaking the language yet, I was thinking one of you could have more info in that? If not I’ll get back with more info on that once I have been back onsite and met with some people.
Originally posted by @Sofia Liebon:
The process of buying as a foreigner was painful, mainly because of the financing piece with many turns with the bank who requested a constant flow of documents during a period of 3 months to determine our credit score. Of course all doc’s needed to be translated to English or French as well (I’m Swedish). But all went well and was worth it in the end.
Anyone interested in knowing more about that let me know if I can be of any help?
Hi Sophie! Thanks for sharing!
- Did you buy it with a loan from a french bank? which one?
- If so, what was the % of the property money you had to put in cash and what was the loan rate?
- What are the documents they requested?
Thanks a lot!
- Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes7y
@Sofia Liebon I'm no expert on the subject but from what I've read the French government is making it more difficult to rent out "locations saisonnières" (vacation rentals). Paris is being hit pretty hard with the most enforcement and most strict guidelines. The different laws put in place depend on the size of the city you're in and whether the rental is a primary or secondary residence. Non-occupant owners will have more hoops to jump through to conform to the new laws.
I know you said you don't speak french but if you can sit down with someone who can translate for you this article is pretty informational: https://www.contrepoints.org/2018/04/14/313971-air...
Hope that helps! I'm sure others on the forum with more experience than me will be able to chime in. Good luck!
@Eric K. I had a couple of investment loans from Credit Foncier: 25% down/15 years and 20% down/20 years both around 2% fixed rate. Minimum 100k euros. They did require a full picture of all investments (RE and not RE) and 3 months of all bank accounts with explanations for all medium and large money transfers. Avoid cash deposits and checks to family members during the 3 months, avoid transferring between accounts if you have several. My guess is that the French government is requiring the loan officers to verify that there is no money laundering activity before lending you some money. They also look at debt/income ratio (taux d'endettement 30% max).
You may also check with a broker/courtier such as CAFPI. I'd suggest to look for english speaking staff who typically work with foreigners so they are used to non-residents... even if you speak french. That's what I did before I decided to go with Credit Foncier.
Good luck!
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