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The Most Romantic Place On Earth
Nov. 9, 2008
Paris, France
PLUS: The Trouble With Tropical Paradises...
And: The Best Caribbean Beachfront Buy This Decade, Thanks To
President Elect Obama
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Dear Overseas Opportunity Letter
Reader,
"I walked over from my office, along the river and then across the
Pont des Arts," explained my friend as I sat down beside him for
our meeting at the little café on the corner of rue du Bac and the
river.
"The lights of the Louvre and the other buildings along the Seine,
glowing along both sides of the river and reflecting and
shimmering on the dark surface of the water," he continued. "The
view...all around...it's perfect.
"When you get to that
point in your life when you appreciate beauty and romance, you
realize that there's just nothing like Paris. Nowhere in the world
compares."
My friend didn't have to sell me on his
position. I've been savoring our Paris experiences these past 10
days, storing up impressions and memories for when we're
elsewhere.
We've spent most of the week preparing our
apartment in this city for rental. Paris must be one of the most
expensive places in the world to carry a piece of real estate.
Syndic (building) fees, insurance, taxes (as a property owner
in France, you're liable for two)...plus we've been paying
electric, gas, phone, and Internet charges, keeping the place
ever-ready for any chance we might have to pop over for a visit.
The truth is, though, we finally had to admit, we won't be able to
get to this part of the world more than once a year for the next
few. We're fully occupied elsewhere. Silly to leave it sitting
empty 11 ˝ months a year.
No problem in Paris. In this
town, an apartment in a central location will always rent.
In fact, this past week's experiences have reminded me 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 as we do, 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."
They 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
conditions notwithstanding.
Again, an apartment in the 1st,
5th, 6th, 7th, or 8th arrondissement of this city will
always find a renter.
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 (this
is the key), 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).
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.
France Home Finance can tell you more about local financing
options in this town.
And my friend Henley Johnson at Flat
Hunter can help you find the Paris flat with your name on it.
Flat Hunter is the oldest property search service in this city. And
it specializes in helping English-speaking buyers (like you) shop.
The challenge when looking to buy real estate in a foreign country
is to break through the international market and access the local
one. In Paris, this is critical, because the best apartments never
make it to the international market--that is, the market of
properties advertised in the windows of "international agencies."
The apartments you find this way are the leftovers.
The
best apartments in this town never appear in any agency window.
They change hands on the word of a friend of a friend or the
recommendation of an old classmate of a neighbor. That's how we
were lucky enough to find our place four years ago.
Henley's group operates at this "private" level and plugs you in
locally.
Furthermore, as in most places around the world,
there's no Multiple Listing Service in Paris. Typically, you've
got to meet and see properties with as many agents as possible
operating in the area where you're interested in buying.
Not so with Flat Hunter, which boasts an extensive and market-wide
network of contacts and resources. The agents, notaries,
developers, private owners, and friends they stay in touch with
call them first when a good apartment comes up for sale. I know of
no other agency in this city operating this way. Henley can tell
you more; reach her here:
ParisFlats@LiveandInvestOverseas.com.
Kathleen Peddicord
P.S. So far, this Paris rental experience has been our most
successful to date. We've found competent, experienced,
professional help all the way down the line, from the
tenant-finding agency to the property manager, from the movers to
the "One Room More" offsite storage people. (If you'd like to be
put in touch with any of them, send me a note:
Publisher@LiveandInvestOverseas.com.)
To maximize our
return, we're converting what has been our home-office to a third
bedroom. For me, this has been the best part of the deal, for it
necessitated a trip out to the Marche aux Puces at Clignancourt
yesterday to shop for a bed. We took Metro line 4 all the way to the
end, climbed out of the Metro station, then braved our way through
the hordes of tourists, shoppers, and sidewalk hawkers that
congregate here always. Onward, we continued, for 15 minutes,
through the stalls of clothes, shoes, electronics, and DVD's to
the furniture.
Clignancourt is the largest flea market in the world, covering 7
hectares and seeing, on average, 180,000 shoppers a weekend. I
think 170,000 of them were there while we were looking for our bed
yesterday afternoon. Moving among these enthusiastic market-goers,
you'd never know the world was ending...
We found a
200-year-old Louis XVI two-person bed in perfect condition for 550
euro. A great deal, especially given the current strength of the
dollar here in euro-land.
P.P.S. What's going on beyond Paris this week?
- Far-roving Correspondent Paul Terhorst continues his travels
in India, where he's hot on the trail of the perfect
retirement haven. Retire to India?! Yes, reports Paul:
"Could Vicki and I live here in these backwaters? Absolutely,
for part of the year. We'd enjoy jungle walks, boat trips, train
trips, and rides in rickshaws. We'd eat the delicious seafood as a
diet staple--the fresh red snapper or pomfret only US$2 to US$4 a kilo
at market, depending on the season. The good life..."
Paul is investigating all aspects of living in India as a foreign
retiree, including health care:
"I asked about health
care," he writes, "and was told that
standard health care and prescription drugs cost between 1% and 10%
of what you'd pay in the United States, in the best hospitals
in the big cities. For example, a coronary bypass might cost US$1,000.
A friend reports that his monthly prescription drugs that cost US$300
in the States cost US$20 here. I checked the price of common statin
(anti-cholesterol) drugs that might cost US$50 to US$100 a month in
the U.S.; here they're US$6. At these low prices, health insurance
makes little sense for expats, and, anyway, I'm told the Indian
insurance schemes cover locals only."
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