All Forum Posts by: Thierry Van Roy

The market is low in France?! Où est-ce que tu habites?!

The market is at its top in France, prices are projected to significantly drop this year. According to Fiorentino (immobiliez-vous) this is not the time to invest.

Then again, it all depends on where you live. I told my sister (Paris) to just rent instead of buy for now, but some regions are probably on the up and up.

A 100K apartment at 500/month is not a deal. It's 5% gross potential rent, but start deducting the frais de service, insurance etc. and you're left with less than 3%. Might as well put it on the bank in that case.

You could even get a better deal somewhere like Liège (Belgium), even with a syndique, it's still a better return.

You can always leverage, but that means you're paying your equity position rather than yourself. Do you need the return on your money now or only in the future? The advantage of leverage is you can buy multiple properties now, but again, this is perhaps not the best time to do so.

If you overleverage with personal guarantees now, that would also negatively impact your ability to get a mortgage for a principal residence. But I would simply go talk to a mortgage professional.

As opposed to price levels, number of transactions, interest rates and so on. One reason I think of is a reported market price doesn't mean it actually gets sold. When the market is locked up, neither seller nor buyer is willing to budge, often because there aren't that many buyers. But if there are a lot of buyers (think Phoenix), then the market moves, one way or the other.

What surprised me is their indicator predicting twice the price drop of official notary statistics.

And their methodology is probably your standard statistics and data mining.

A French Zillow-ish site (MeilleursAgents.com) has mapped out the buyer/seller ratio for its markets. They consider it a more reliable indicator of where the market is going than anything else.

Their rule of thumb:

more than 3 buyers for every seller: appreciating market

2-3 buyers for every seller: stable market

less than 2 buyers for every seller: depreciating market

The fluctuations are impressive: Paris went from 6 to 1,4 buyers for every seller in a few years. Because of this, they expect the prices to drop double the official estimates.

Now I wonder, is this a reliable indicator? Does anyone have experience with this, because google only talks of this indicator for stock options.

Thanks!

It's about a million in USD, a cap rate of 7. It's situated at the most prominent boulevard of Liège, so you do pay extra for that as well so to speak.

So this is a very, err, exotic question, but what I'm looking for is this:

Reconstructable structures for a beach club.

The thing is France has had some legislation passed which abolishes beach clubs (think Saint Tropez) that are kept all year round in "environmentally sensitive zones" (i.e. everywhere).

They still allow licenses on leased beach land during the season (april-october) but outside of that, they need to magically disappear.

Save from having a 400.000 EUR write-off every year, I believe there has to be another way. Is there anyone here who knows of some sort of development tech or whatever which would make this possible?

So what I'm basically asking for are overgrown tents, but the Bedouin in North Africa weren't able to help me (save for lots of dates, which were delicious).

Europe is complicated. Every market is in a different situation, interest rates and financing vary and so on. The best way to understand Europe is that the EU has rendered all competition to a fiscal nature. So in order to attract international "hot money", they need to make it interesting for investors. That's why France is going down (the Hollande fiasco) while Germany and The Netherlands are on the up and up again. Though Germany is also because of Eastern Europeansd, while the UK is booming because of Hong Kong Chinese and Arabs. Meanwhile, cheap deals in the south (Spain), but there are a lot of pitfalls.

Don't expect big fiscal advantages though. If you have the capital for Monaco and such, then you're probably not on BP seeking advice.

If Asia peaks your interest, I remember this documentary series by some Brit on (among others) Dubai, Signapore, Vietnam, Japan. Don't remember the title and can't find it keyword searching youtube anymore. But the series was very helpful to me as an investor.

As the above have already stated: you need cash. At least compared to Europe and most of Asia, the US is dirt cheap. You can get financing, but don't expect anything for below 80,000 EUR in cash deposit.

Or you need to be willing to go on an adventure in a third world country like Cambodia. Did you know Nigerian houses have "NOT for sale" signs outside, because their house has been sold nine times over to 'investors'?

Thanks to everyone for the replies! It really helps!

Rob:

The ones that are up to date are on gas, but most are still using boilers. Only some that don't suffer from the high ceiling syndrome are equiped with HVAC.

Mike:

It's an interesting niche because there's a lot of inventory, but not many buyers. I expect technology to eventually catch up and allow for some opportunities, but for now you have to make due.

Your problem is the same as mine: they are worth a lot in prestige, but that doesn't get you any more cash flow. Owners aren't willing to take a big enough haircut yet, even if deferred maintenance is an obvious issue. These will generally continue to fall into disarray for at least this decade, I suspect.

I just came across one that looks just sooooo tempting. Just looking at it makes both your eyes and mouth water. You can take a tour here. A thing of beauty and (apart from an additional duplex in the back courtyard) turnkey. It is under consideration, because the deferred maintenance is a lot less of an issue here than in most properties I find. Also, prime location in a market that's poised for tremendous growth.

These buildings are on a list of protected properties (the oldest one I've come across was from 1500!), sometimes just the facade but often the inside as well. This means you need to use special building materials and you can definitely not lower the ceiling (they're decorated with authentic stucco).

Renovations up to 60.000 EUR (and sometimes even 100.000 EUR) on these buildings are tax deductible and even sponsored by the state in Belgium. More or less the same thing in The Netherlands. But what they don't tell you is you have to jump through a ridiculous amount of hoops to get access to these benefits. Like the renovations have to contribute to maintaining its historical authenticity for at least 60% and so on.

I'm in Europe, old cities like Liège. These buildings have ceilings of 12ft and up. The rent is hardly increased by volume (offset by heating in any case), only living space really counts.

A mezzanine would sound attractive, but there are building restrictions and I fear the structure won't support them. Not to mention the ROI, I fear it would cost me about 10,000 USD per unit if it is at all possible.

In my market, there is a lot of inventory of historical manors from the 17th century and up (example). These ask for a lot of renovations in order to increase their lifespan, but it is manageable...

Except for one thing that has left me mesmerized: ceilings. I don't know if it was simply the fashion or whether our ancestors were 10ft tall, but it eats away the heating.

Despite my best efforts, I haven't been able to find a solution to this. Experts told me all they could do is apply like a dozen different insulation methods like special wooden floor heating. But then the owner would have to take a 90% haircut in order for me to meet my numbers.

Does anyone here know what to do with this wasted volume? Any innovation or trick I'm missing? Something has to give because, save for heating suddenly becoming dirt cheap, there isn't much that can make these buildings profitable.

@Erik Noordam

The Keizersgracht? I remember this horror story of an appartment being rented there at 200 EUR and subletted at 2.000 EUR without any means of getting out of the contract for the owner. I wonder, do you know whether mister Blok's reform wizardry finally got this fixed?

I'm looking at a multifamily with a lot of potential in an A location, but the units are rented at 400 EUR for an unspecified term. Wouldn't touch it with a 5 foot pole if any remodeling can't get me a rent above the 681 EUR treshhold.