Investing In Weak Euro-Denominated Property

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MAILBAG

“Kathleen, I was interested in the subject of lower prices for real estate and cost of living in Paris, among other desirable European cities. This is certainly attractive at present, but isn’t there the very real probability that the euro will return to strength and with it the high cost of living that has kept us away over the past seven or eight years? Since this is a virtual certainty, what practical steps can one take to anticipate and deal with this?”

–Rosalie G., United States

It’s looking as though this window of euro opportunity will continue for a while, but you’re right, of course. Everything that goes down eventually moves up again.

Housing is the biggest part of any monthly budget. Take advantage of the opportunity to buy a piece of euro-denominated real estate using today’s strong dollar, and you eliminate the risk of rising housing costs when the euro rebounds—assuming you don’t buy with a mortgage (which is possible in much of Europe).

Even if you do take out a mortgage for the purchase, you can mitigate future appreciation of the euro by creating a euro income stream. Buy today with local financing and rent the place out until you’re ready to use it yourself, creating rental cash flow in euros.

If your budget allows, buy two euro-denominated pieces of real estate today and rent them both out until you’re ready to move into one. Then you could continue renting out the second to keep some euro revenue flowing.

About a dozen years ago, we bought an apartment in Paris. The euro stood more or less where it stands again now. A year-and-a-half ago, we bought a second apartment in Paris. In hindsight, maybe we should have held off on that purchase; our dollars would buy noticeably more today. On the other hand, we found an apartment in the neighborhood we’d targeted that checked every box on our list. We’ve learned to strike when opportunity presents itself if we’re able.

The first apartment has been rented out these past seven years we’ve been living in Panama City (occupied 95% of the time). We’re returning to it this summer, meaning no more rental revenue there. However, now we have the second place to continue earning us euro cash that we can use to cover our euro expenses going forward.

It’d take some effort to put together a strategy like this over the course of several months or a year, rather than over 12 years, as we have. But it’d be possible and could guarantee you the Old World retirement you’re dreaming about.

Continue Reading: Retirement On The Coast Of Algarve, Portugal

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