All Forum Posts by: Denis F.

@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!

@Divya Pratap

Over the last few years, I couldn't get the numbers to work for another RE investment with my previous criteria. I expanded my search initially from Seattle area to a wider area in state, then out of state in search for better ROI. The most important rule was to be able to rely on someone local I could trust. I expanded my search to international markets based on countries I've visited and connections. But most places I looked at were either already discovered and expensive (such as the island of Bali, Singapore) or too risky (Asian countries with unstable politics).

I grew up in France (many years ago) and didn't really want to invest there because of the "socialist" rules penalizing investors. But after looking at the numbers carefully, having family there to help out and knowing the language (although it is not a must), I decided it was worth a shot.
My main motivations are:

- Generating income in Euros (hedging against dollar value fluctuations)

- 2% fixed / 15 years mortgage (1.4% for owner occupied) - healthy leverage considering current inflation around 2%

- I chose an area with a low price point (not Paris, but cities with $30k to 50k/unit) with higher risks but working with much smaller numbers ($100k for 3 units in France vs $1M for 3 units around Seattle). So I decided to buy more units and factor in a larger amount for vacancies/issues in my ROI maths.

Note that I did visit the places before making offers but everything after the first visit was done remotely (through power of attorney).

@Divya Pratap

I'd recommend a good understanding of the tax system in both the foreign country and the US. You'll have to declare the foreign property income on your US tax forms and most likely in the foreign country so you may be "double taxed" if there is no tax treaty between the 2 countries. It would impact your net ROI.

As far as which cities, the countries I looked at have the same dilemma as the US: desirable areas are so expensive that the ROI is relatively low and less desirable areas have a higher ROI but higher risks.

I will add that countries with a socialist tendency such as France can have complex rules (from subsidizing renters, rent control, subsidizing rehabs, tax cuts for renting to people in need...) with each new government tweaking those rules, they can have a serious impact on real estate investment market. My point is to reinforce the importance of knowing your targeted market.

Finally, take in consideration the impact of currency stability... and mortgage rates if that's an option (2% interest for 15 years was an important factor in my decision to invest in France).

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.

Hi @Account Closed, not sure whether there is something specific to the islands but you don't have to be french citizen to obtain a loan in mainland France (just like you don't have to be US citizen to obtain a loan in the US). There are brokers such as CAFPI with staff specialized in loans for foreign nationals (typically British but they also work with US). Some large banks also offer loans to foreigners. Small banks and credit unions typically don't anymore because they don't want to deal with the mandatory reporting to the US government of their US resident customers.

You can get a 15 or 20 years fixed at less than 2% interest these days... You can sometimes include the amount of the rehab into the loan and basically borrow more than 100% of the property value although there are some restrictions.

As a side note, living in St Bart 9 months a year means you will be a french resident (not citizen). It also means that if you are US citizen, you'll also have to file your US taxes which I understand is a real headache when you live abroad... That will be in addition to filing for french taxes... so plan ahead...

Consider making an offer at what you think it is worth. They will have your name if/when they get reasonable.

I was keeping an eye on a 4plex on the market for almost 2 years, clearly overpriced initially. Market eventually caught up to the list price and when I was about to look at it, list price went up by $100k. Go figure...

Good luck and let me know what you decide.

Thanks for the various ideas. 

@David S.  Do you think the extra cost associated with special features is usually worth the money as an investment? In my experience, they will help with keeping vacancies lower but it is hard to get a higher rent on long term leases. For instance, if the place cost 25% more to buy because of a great view compared to the same without a view,  I'll get 10% additional in rent but not 25%.

It works much better with short term rentals where people would more likely splurge and pay more for a unique architecture or a great view for a week.

Hi BP,

I want to clarify that this question is not relevant to religion but only to my interest in older buildings. You could replace the word church in my question with temple or many old building types not designed for living in full time.

Traditional french religious institutions used to own and still own many old buildings of all kinds across France and have been selling a number of them for a relatively reasonable amount of money. An example is a private school made of a gym, several buildings composed of many classrooms and a chapel (not quite a church but it has a functioning bell :-) ). It was divided in 8 different sections of about 4000sqft each and put up for sale between 130k and 160k euros each. Target buyers are developers who would turn each building into 4 to 8 apartments and rent them out (close to train station). The chapel is the cheapest of all. It is not a cathedral and doesn't have exceptional architectural qualities but it is a well maintained sturdy old structure with very tall ceilings and tall windows. Religious artifacts have been removed and the former owner institution allows it to be re-purposed obviously.

I know some people transform fire stations or libraries or churches into their own home but they are usually driven by passion more than financial wisdom (no offense). I'd love to hear of any ideas or experiences from investors where an old building was re-purposed without becoming a financial disaster.

So, what would you suggest a good re-purpose would be? Do you have any experience in the US with changing an old building into apartments? Can you think of other creative uses for such a space? Just brainstorming...

Well, it is hard to answer since there are many variables. If your market has good economic data, appears to be under valued and people keep moving to the area, then it is a good "basket" so keep investing in it. It keeps your maintenance costs down and you can keep an eye on your properties. 

You may then look at local factors: my 3 rentals are in the same area around Seattle. One of them is within the city limits and is subject to inspections and whatever new restrictions local politics decide to enact since they believe landlords are to blame for the high cost of living around here. I will now avoid buying within Seattle city limits.

Next, if your market is overheated or not particularly promising or if all your properties were sitting on the same fault line waiting for the next big earthquake to happen, find a different "basket". I am now testing a market that I know enough for my next investment property which happens to be in France but you don't have to go that far :-) I'd suggest you build enough experience with local rentals before you buy in a different area though.