The World's Best Rental Buy
Nov. 4, 2008
- If You're Shopping With U.S. Dollars, You've Got More Buying
Power Than You've Had In Two Years...
- The Secret Is Your Rental Manager...
- People Will Always Come To Paris...
- Proposed Changes To Costa Rica's Foreign Retiree Laws Aren't
Good News For Pensionados, Current Or Future...
- The French Are As Engaged As The Americans, It Seems, This
- Four Steps To A New Life In Safe, Affordable Uruguay...
How Are You Going to Be Able to Afford to Retire?
Seeking and building a new life abroad is not only the most
sensible way to approach retirement in the current global market
It's not only the best (maybe the only) way to
yourself that your retirement funds will carry you all
the way through retirement...comfortably and even in style...
It's not only the best way to make sure you're able to sleep at
night...that you're not kept awake at 3 a.m. by money and budget
It's also the start of the greatest adventure of
your life. The most fun you'll ever have.
The New Retirement Revolution
Dear Overseas Opportunity Letter Reader,
dollars have more buying power in euro-land right now than they've had
in two years.
And the market in Paris, for both sales
and rentals, is soft, down, and falling.
Ah, ha, I can hear you
thinking to yourself, dear reader. And you're right:
the time to buy or to rent in the City of Light.
means," agreed our French friends over lunch today, who themselves are
shopping for bigger apartments to rent and to own, "this is a buyer's
These past few days, we've been addressing the Paris
rentals market from the other side. We're not looking right now to
rent a place...we're looking to rent out the place we own.
we took our leave of this city four months ago, we decided not to rent
out our apartment. We wanted to be able to return for visits as often
as our schedules allowed.
Meantime, we've been paying the
monthly syndic (building) fee, the local taxes (taxe de
habitation and the taxe fonciere), the insurance, the
electric bill, the phone bill, the wireless fee...
Paris is one
of the most expensive places in the world to carry a real estate
asset, so, we've decided (that is, Lief has decided and I've agreed)
that we should find a renter.
The way we see it, this isn't any
old rental...this is our Paris home. And we don't want any old renter.
We want someone who'll appreciate the place as much as we do.
OK, that's not going to happen. But I think we've found the next best
thing: a rental management agent who seems to respect the apartment
almost as though it were his own.
Abdy Jouadi just left. His
agency, Paristay.com, specializes in high-end and executive
rentals in the 5th, 6th, and 7th arrondissements. Even given
the current down market, Abdy thinks he can find us a renter "in three
to four weeks, maximum"...and at a very appealing rate.
conversation with Abdy reminded us that a Paris apartment can be one
of the best long-term real estate investments you ever make. Because
it's versatile. You can use it yourself and, if you enjoy Paris, yield
an incalculable return. And then, whenever you decide you're ready,
you can arrange to find someone who'll pay you for the chance to enjoy
it for a few weeks or a few months himself.
Paris sees more
tourists than any other place on earth, and it's hard to imagine this
changing anytime soon. Good times and bad...bull markets and
bear...people come to Paris.
"I had a client in October who
came to town for a month while her kitchen in Los Angeles was being
remodeled," explained a friend over lunch today. "She rented an
apartment in Paris for four weeks, an apartment in Rome for two, and
another in London for two more."
My friend works for a custom
tour agency. "Here in Paris," she continued, "I organized personalized
shopping days for her. I don't think the current global market
downturn has affected her. People with her kind of money ride this
stuff out...and, no matter market cycles, come to Paris."
come to Paris...and they need a place to stay.
So, when you buy
a Paris pied-a-terre of your own, buy first what you like. This
is my first rule of real estate investing: Buy what you like.
Then, here in Paris, buy what will rent easily, global market
An apartment in the 1st, 5th, 6th,
7th, or 8th arrondissement of this city will always find a
Furthermore, as our new friend Abdy explained to us
today, the more bedrooms the better.
choose studios or one-bedrooms. Which means there's no shortage of
those. So, if you've got a two- or, better, a three-bedroom apartment,
you can command super-premium pricing. A three-bedroom furnished
apartment in a prime neighborhood can yield as much as 100% more than
a one-bedroom unfurnished over the long term.
That's the second
secret Abdy shared with us today: Furnish your place. An investment
not only in furniture, but also in décor ("classe," the French
call it) can really help to better your yield.
What kind of
return can you hope for? You're not going to get rich off a Paris
apartment rental, but, with the right rental manager, you should be
able to yield 4% to 6% net (assuming no mortgage) on a short-term,
less if you rent long-term (three months to a year at a time).
For a short-term rental, you'll pay rental management fees of 25% to
As I've mentioned, though, if you use a company that
specializes in corporate rentals for transient executives, as we are,
you pay no fee for them finding you a renter. However, you'll still
need a management company—someone to be on call for emergencies and
repairs, someone to keep an inventory of apartment contents for you
and to check it after every tenant vacates, someone to make sure the
local bills are paid, someone to meet new renters, someone to keep
track of the keys, etc. This should cost you about 10% of the monthly
Remember: Foreigners can finance in France. You could buy
an apartment in Paris with as little as 20% down. If you're buying to
rent, you won't cash flow with an 80% mortgage. However, you could
borrow up to say, 60% of the purchase price and make enough through
rental fees to cover the mortgage, the management fee, and other
expenses from day one.
The catch with a French mortgage (as in
much of the world) is life insurance. It's required. And, in France,
you can only buy life insurance that will cover you up to age 70 or
75, meaning you can take a mortgage that extends only to that age.
France Home Finance can tell you more.
P.S. This decision to rent out our apartment in Paris
has been made nearly overnight. We took a close look at the cost of
carrying the place, considered realistically how often we'd be able to
get back here to use it, and realized that not renting was silly.
On the other hand, renting means clearing out all our personal
belongings in the next five days, before we return to Panama. In
Paris, we've discovered in the past 24 hours, this isn't such a big
deal. We've found an off-site storage facility (www.boxplus.fr ...with
English-speaking staff)...that has put us in touch with movers who say
they can pack and deliver to the storage unit all the things we'd like
to take out of the apartment before the renters move in...and they can
do it before the week's end.
P.P.S. I don't mean to
over-simplify. We've had near-disastrous experiences as landlords in
Paris in the past. The key,
as I've explained before, is the rental manager. I have a good
feeling about Abdy...
P.P.P.S. "Who are you voting for?" has
been the question from every French friend we've spoken with these
past few days. The French are watching the U.S. elections as closely
as the Americans, it seems. If the vote were to take place in this
country, there'd be no question: It'd be President Obama for 2009. The
real winner won't be announced until after I'm asleep tonight, so I'll
await news in the morning...
All the tax and management benefits of a French leaseback...plus
up to six months personal use each year.
When we visited Costa Rica last summer, we had the sense
that the Costa Ricans didn't really want us or our kind hanging
around. Everything about getting in and out of the country and every
encounter we had with the locals gave us the impression that, while
they were happy to enjoy our custom...they were maybe happier to see
Today, our Costa Rica Correspondent David Stubbs
reinforces our impression. He reports that the Arias administration
has proposed a new immigration law that would increase the financial
requirements for pensionados in this country from US$1,000 to
US$2,000...and for rentistas from US$1,000 to US$5,000 a month!
Furthermore, if the proposed changes go through, they'll apply not
only to new pensionado and rentista retirees...but to
existing ones, as well.
Nobody'd be grandfathered.
foreign retirees living in the country already would have to provide
proof of the new levels of income to be permitted to renew their
Plus, should the new legislation pass, all
foreigners in Costa Rica would also be required to join the Caja
Costarricense de Seguro Social, the national social security system,
meaning they'd have to pay for medical coverage this way...even if
they have medical insurance otherwise.
If this new legislation
passes, pensionados and rentistas in this country will
move on; many will have no choice. And would-be retirees considering
their options (like you, dear reader) will do well to take Costa Rica
off their list.
We'll keep you posted.
FROM THE MAILBAG:
"I am a retired physician, planning to retire in Uruguay. I
need advice, information about the cost of living, medical care,
taxes, etc. Can you help?"
-- Gabriel C., Italy
Start with the
Uruguay Country Page on our website, which includes basic
statistics and other general information.
Next, review our
current and complete monthly
Uruguay Budget. You can live well and comfortable in
this country on as little as US$1,038 per month.
preferred Uruguay attorney is
Juan Fischer. He's the man to contact for help with all
issues related to residency, real estate purchase, incorporation,
taxes, banking, and visas.
Step #3: Read past issues
featuring Uruguay in general and Juan's advice in particular here:
In Style To The Switzerland Of South America"
A Resident--It's Easy"
Panama Of South America"
Roving Latin America Editor Christian MacDonald last month filed a
comprehensive report on living in La Barra, Uruguay, which he
has identified as the top choice in this country for a sophisticated
seaside retirement. This report is available to subscribers to our
Overseas Retirement Letter.
A one-year subscription is available right now for US$36.
Editor-in-chief of the Overseas Retirement Letter Lynn
Mulvihill promises more Uruguay coverage in coming months. "Uruguay is
one of the world's top choices right now," Lynn explains. "We'll be
giving it more virtual ink."
Finally, if you're considering
Uruguay, the best thing to do is to get on a plane and take a trip
down there to get the lay of the land firsthand. And, right now, as a
reader of these dispatches, you can
spend up to seven days in the country free.
and developer David James, the man behind the premier American-style
retirement community in all Uruguay, has extended an open invitation
for Live and Invest Overseas readers to come down to take a look for
themselves as his guest. David's offering a seven-night stay in
Montevideo gratis for any reader interested in seeing what he's
building out on this country Gold Coast. David's
Sugarloaf community is just outside Punta del Este.