Anyone buying in France???
Investor · Paris, France · Member since 2017 · 7 posts · 9 votes
Hello,
I am an american living in Paris and I have recently started investing in real estate. I have purchased three apartments in the last two years (in Paris and Marseille) and am looking for more! I have learned a lot from the bigger pockets website and books but most of the discussions are geared towards investments in the US.
Just wondering if there is anyone in the forums that has real estate in France. I would love to meet people who are also investing here.
Looking forward to meet anyone who is in my area :)
Best,
Maura
@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.
@Alexi Schreier I bought them over the last 14 months, so yes, I still own them. Yes, I am somewhat impacted by some of Macron changes and by the CSG tax for non-EU residents but I am buying relatively affordable units and my goal is long term buy and hold (30 years) so I am not too worried about tax changes. They'll change again many times before I sell and others have a lot more to lose than I do. My motivation is not to get a better ROI than US investments but rather generate euros long term to hedge against currency value changes and an eventual USD value drop.
Also, I targeted units already rented for which rent is below rent control threshold. It is not in desirable areas but rents are low and so is purchase price. One of my tenant moved out recently and the new tenant moving in is paying 30% more while still within rent control requirements... The kind of value-added which makes up for higher taxes. The equation low purchase price + low interest rate + potential for higher rents works for me regardless of Macronomics :-)
My first buy was in St Etienne but it was a bit of an experiment with rehab. I'll take me another year to conclude if it was worth it. Right now, it doesn't look too good as we have to deal with lawsuit within the HOA. I also underestimated some of the rehab costs... a good lesson. Government implemented a mandatory assessment of heat loss a few years ago countrywide when you buy or rent so tenants know how much they'll spend on heat or AC. Tenants care about it so when you consider a rehab, you have a dilemma between a cheaper but ultimately less attractive rehab or insulation in walls/ceilings/floor and a new set of windows/doors $$$. I am navigating the various potential subsidies to determine my path forward...
My previous example is in a smaller city around Lyon in which I bought properties in relatively good shape and with long term tenants. I would recommend Lyon area. Central location within Europe, many companies who need a good location without paying the price of Paris. Amazing food. Mountains, sea and Paris within a few hours drive or train. I think Lyon has a good future ahead: I don't think it has too many foreign investors yet (yes, it's all relative) but it is getting more and more visibility because of its food scene, culture, history and amazing events (fete des lumieres).
If you are serious about investing in France and are not quite fluent in French, consider this:
- If you talk about notary to a french speaking individual, chances are he will understand "notaire" which is more or less an escrow, not a notary public. Could be confusing when setting up power of attorney.
- If you say "escrow" to a french speaking individual, he will hear the french word "escroc" which mean a crook.
- Trying small talks, if you use the french verb "trompe" which sounds very close to the last name of a very prominent public figure in the US, be aware that "trompe" in French means one of the following depending on the context: misleading, deceiving, cheating, making a mistake. :-)
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!
Thanks a lot!
Hi Eric,
For the loan we got offers from 3 banks, HSBC, BNP Paribas and Credit Foncier, we went for HSBC in the end.
Interest rate was at 1,85% for 15 years (note we bought it at a SCI and otherwise would have been a bit lower).
We never asked minimum upfront payment as we had decided on a sum to put in since before and this was more than the minimum.
Documents they requested was:
PERSONAL
FINANCIAL
PROPERTY & PAYMENT
@Denis F. Thanks for the details! Lyon is definitely growing and will always be a major hub in France so congratulations on investing there.
I’m fluent in French but thanks for the heads up! I’d love to see a French broker’s face if you were to tell them: "J’aimerais travailler avec une compagnie d’escroc" when you’re trying to say you want to work with an escrow company :D
@Sofia Liebon Thanks for sharing such a detailed list.
In addition to the list provided by Sofia, I was also asked for lease agreements for properties already owned and rented. However, I didn't have to provide credit cards info, just checking investments accounts in all countries.
@Sofia Liebon Thanks for sharing such a detailed list.
In addition to the list provided by Sofia, I was also asked for lease agreements for properties already owned and rented. However, I didn't have to provide credit cards info, just checking investments accounts in all countries.
International investing sounds pretty wild. It's crazy how many different regulations there are. We've got a pretty interesting discussion going on in another thread about a French tenant who hasn't paid their rent in over 14 years. Some members from other countries like India have chimed in on their country's Landlord / Tenant policies. May be a good read for some of you.
@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.
@Account Closed Cant help you there, but please let me know how it goes for you. Would love to know what that is like, international investing sounds pretty interesting to me.
@Account Closed @Sofia Liebon @Denis F. @Account Closed
All,
This is an excellent thread - thanks for all the insight! My close friend & business partner currently lives in Monaco and already owns small residential properties in both Antibes and Mougins, as well as operates a co-working space in Monaco, and we are exploring a range of investment opportunities across the Cote D'Azur. We both have backgrounds in real estate.
Does anyone have thoughts and/or insights into multi-family residential, mixed use (e.g. residential/office) and/or small office market in say Cannes or other regional cities. We would be looking at buying tired/neglected & under-appreciated assets, do some renovations & reposition them (e.g. value-add strategy). We are also reviewing the vacation rental market, but that is much more straightforward.
Any insights are greatly appreciated. I will likely be in Cannes in early May & my business partner is in Cannes/Mougins almost weekly, so would be great to connect with like minded individuals.
Best,
Matthew
@Matthew Schroeder I can give you the contact info to a loan broker who works in Aix-en-Provence and knows the region well. He may be able to point you in the right direction to some people he knows on the Cote d'Azur.
DM me if you're interested :) Best of luck on your search!
@Matthew Schroeder I only have limited experience with mixed use at this point (small business on ground floor, a few units above). Similar to the US, business lease is far better than residential, the tenant is personally liable if the business fails to pay rent and I am not aware of any non-sense laws protecting a tenant staying for free. It definitely seems a good space for future purchases for me.
A word of caution on rehab in France: Assuming you'll be looking at very old buildings: Don't rely on your knowledge of US rehab work and apply it there like I did to some degree. A roof in France on an old quirky-sized building is way more expensive to replace than a typical northwest US roof despite lower labor rates. Old thick stone walls are much harder ($) to work with if you want to make significant changes. Very little is standard, straight or square. Watch for mold and humidity, also more tricky to figure out and resolve.
@Denis F. Thank you very much for the excellent input! Yes, we are being open minded to the many nuances & complexities of renovations and complexities of doing business in France. Thankfully, my business partner is doing a pretty major rehab of a villa in Mougins right now, so he is getting excellent, on-the-ground experience. They also did a pretty major renovation of a small condo in Antibes. A few years ago, we also briefly reviewed a potential investment of a 3 unit property in Cap D'Ail, but the level of rehab which was required was quite extensive, so we passed.
I appreciate your comments & let's keep up the dialogue. I will likely be in Cannes in early May, and plan on looking at various properties.
Best,
Matthew
@Maura Covaci Hi Maura, I’m based in Paris but after following a seminar, England seems to be way more promising to invest for rental properties... have you studied the English market? Happy to connect with you :)
Hi All,
Anyone in Cannes (or surrounding areas) and would like to catch up for a coffee to discuss real estate? I will be in Cannes for a conference from April 1-5 and then will remain in the Cote D'Azur for a few more days to review real estate opportunities. @Sofia Liebon
Best,
Matthew
hello BP group glad i found you, i live in France for a 1 year now and i'm looking to invest in mi first house ,but a i'm having a little problem to understand the french tax system , any one now if exists any loopholes that can be use in terms of avoid paying same taxes ,any tipe of information is welcome .
thank you for your time
I’m an American millennial entrepreneur who is interested in buying a small rental income property somewhere on the southern coast. I love Nice, but I’d feel most comfortable spending in the $200K range, which pretty much prices me out.
Does anyone rent Airbnbs in Nice/Cannes/french Riviera? I’d love to chat with you about your experience and where you see any good deals!
I’d love to know of any hidden gems areas along the sea that an Airbnb would do well in during the summer months, and that I could potentially rent longer term during the winter months. I know Marseilles, but I’m not crazy about it. I’m looking for something smaller. The water is the real draw for me. If I could afford Villefranche or Eze I would probably buy there.
I’d also love to know if anyone has any research on the property markets along the coast.
I’ve built a model for what I think it would cost to purchase and how income I could make but I’d love if someone could take a look and give me any pointers or share theirs with me.
thanks!
PS I was just in Nice and found an apartment that I really like for €280K but by my calculations I’d still be losing a thousand or more euros per year after short-term rental income. I spoke with a mortgage banker, submitted all of my documentation, and they said they spoke with the bank and that the bank gave them an ok with 30% down.
I have been studying global markets and investing internationally for RE companies for 10 years and know the french market quite well.
The take away about France is as follow:
pros
- relative market stability
- stable currency (euro)
cons
- highest taxes to gdp in the world (capital gain taxes, transfer tax, income tax etc)
- extremely complex / opaque tax system and aggressive tax authorities
- widespread corruption around high profile transactions and construction permits
- 3 months transaction close due to high regulation burden
- local authorities have first look right to purchase the property you have under contract. The deal must be reviewed by the city to be allowed to move forward
- currently highly overvalued market by all metrics, price to income etc
- low appreciation and returns compared to emerging EU member states and US
(most RE companies offer annual returns around 10% (minus high taxes) for high risk speculative investments)
- extreme anti landlord legislation
Basically, if you love France and want a secondary residence sure go ahead, but otherwise, given the number of attractive alternatives available at the moment, i don't see any valid reason to invest in France unless you are french and unable to invest elsewhere. Even for french tax payers, much better opportunities exist a couple of hours outside of France in the eurozone..
@Jeff Hudson If you are doing an airbnb from a far, I highly recommend condo over home. Homes require more maintenance and trash collection can be more of an issue.
@Account Closed
Hello, just read your post from 2 years ago. Do you think living-in flipping is doable in Nice, Antibes or Paris ? For example, buy a fixer-upper, use it as primary residence, fix it, and sell it in 2 years. I read "The capital gains on the sale of your primary residence in France are not taxable, which is a significant difference from the US taxation of primary residences."
Thanks!
We are now looking to purchase in Annecy and would love a recommendation for an agent there. Everyone we speak to would not recommend theirs. It's a little disheartening.