Dec. 4, 2009
Paris, France
PLUS:
- Top 10 Best Buys In Panama City Today...
- How To Retire Overseas, Your Getting Started Primer...
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Dear Live and Invest Overseas Reader,
"
La crise," as the French refer to the current down economic cycle they find themselves struggling through, notwithstanding, the short-term rental market in Paris continues strong.
So explained our rental property manager in this city when I met with her earlier this week. "Every one of my apartments is rented," she continued. "In fact, I need more inventory."
Yet our apartment has been vacant since our tenant of one year vacated in August. Three months without cash flow later, Lief and I have been growing concerned.
"If all of your apartments are rented, and you could fill more if you had them," I couldn't help but wonder aloud, "why is ours sitting vacant?"
"But you said you wanted long-term rentals only," Linda replied. "We will find one, I'm certain. It will just take more time."
"But if we allowed short-term renters?" I asked.
"Oh, I'd have someone in here within two weeks. If you were open to short-term clients, you could have been fully occupied these past three months, just like all my other apartments."
On the one hand, I couldn't help but wonder why Linda hadn't made this point sooner, before we'd lost the opportunity for three months of rental income.
On the other hand, hoorah! This was great and welcome news and reminded me of one of the advantages of real estate investing--when an asset isn't returning according to expectations, adjust the asset. Bought a house in a resort region where there's a lot of competition for rentals? Improve your chances of attracting would-be renters' attention by adding a swimming pool. Invested in an apartment in a place without zoning restrictions and having trouble finding tenants? Try advertising your asset as commercial rather than residential. Struggling to fill your long-term rental in Paris? Offer it on the short-term
market.
Which is what we've decided to do, and, already, Linda has found us renters for Christmas and the New Year.
To be fair, I can't blame Linda for not alerting us to the falloff in the long-term rental market and suggesting we consider short-term sooner. When we signed on as her client last year, we were adamant. We want one-year tenants and longer, only, we insisted.
There are pluses and minuses either way. For us, deliberating the short-term-versus-long-term question as we prepared to leave Paris for Panama, the biggest short-term minus was the wear and tear it'd mean on the property. Holiday-makers coming and going week after week take less care and cause more damage. Each new renter must learn how to use the dishwasher, the washing machine, and the heating system. In the process, some breakage is unavoidable. A tourist staying in an apartment for a week or two isn't going to replace a glass or a dish when he breaks one, but someone living in the place for a year eventually has no choice. With short-term tenants, keys get lost, and knick-knacks disappear. You must accept all this from the get-go.
As we were leaving our Paris home of four years, therefore, short-term seemed too risky. Long-term was the only option we could stomach.
Even though we realized that long-term comes with an important downside, too. If your place is rented 100% of the time, you can never use it yourself.
In addition, in Paris, long-term typically means you net less. It looks like this should be true in our case. Now that we're officially on the short-term circuit, if we're able to obtain the 70% occupancy that Linda has represented (she maintains this is a minimum expectation for our property in the current market), we'll net out 10% to 20% better, all things considered.
Yes, we're a little nervous. Still, Lief is excited at the prospects of a better net yield, and I'm looking forward to the other benefit of going short-term. Now we'll be able to plan regular return visits to the City of Light. I'm already consulting the kids' school calendars to identify dates to ask Linda to block off.
Kathleen Peddicord
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"Just how much cheaper is Panama City than Paris?" friends have wanted to know all week.
In truth, as I've explained,
it's costing us more to live in the Panamanian capital than it did in the French one. This is because of how and where we're living. Certainly a family of three could live on less.
However, as I've assured everyone in Paris this week, we are enjoying some tremendous bargains. Here are the top 10 best buys in Panama City today:
- Man's Haircut: US$3 (no, you won't be embarrassed by the result)
- Dry Cleaning: US$1.25 per item on average
- Bottle of Chandon Champagne: US$9.95 (strictly speaking, not champagne, as it hails not from that region of France but from Argentina...still, it's a product of Moet & Chandon and very quaffable)
- Movie Ticket: US$3 (for a first-run movie in English, depending on the theater and the day of the week)
- Large Bucket of Popcorn and Soft Drink Combo in a Movie Theater: US$3.50
- Taxi Ride: US$1.35 (for one person to travel from one zone to another...and don't let any taxi driver tell you otherwise)
- Full-time Maid: US$250 per month (you can pay less, but, for this salary, your full-time helper around the house will also iron and have dinner on the table for you when you get home)
- Bicycle Rental on Amador Causeway: US$3.50 per hour
- Bottle of Local Beer in a Center-City Bar: US$1.50 (Panama Editor Rebecca Tyre says I should point out that Balboa is the best)
- Car Wash: US$3 (to have your car detailed inside and out by hand)
"Am enquiring regarding buying
insurance to cover medical expenses. The cut-off age in Peru for a policy is 60 years of age. The insurance companies in this country don't want to speak to me, as I am 68.
"What should I do? Do you have any suggestions?"
-- Irene P., United States
An international policy from Bupa or HTH Worldwide is probably your best option.
Read here for more on how to think through your choices.
"Kathleen, do you have a 'first things' list of
things to do to prepare to make the move? I have a few years before it is feasible but would like to begin planning. How do I start?"
-- Sherry A., United States
The book I've just written for Penguin Books includes a "Getting Started" section that details everything you should consider as you prepare for your international move. I believe this is as complete a resource as you'll find. "How To Retire Overseas" will be in bookstores in the States starting in March 2010, but you can buy a
pre-release copy today for a discount here.
.
