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Personal Finances / Buying or Selling a Home
|Subject: Re: buying property in europe?||Date: 4/25/2001 4:23 PM|
|Author: Institution||Number: 19698 of 126963|
i am an american living in america who wants to buy a rental property in paris that i can use part of the year for myself and rent out the rest of the year to tourists, students, etc. i have only begun to research. does anyone out there know of any resources or has anyone figured out how to buy property abroad, how to get a mortgage, how property taxes work, whether foreigners are even allowed to own property, etc. etc...
DOOOONNNN'TTT DDDDDOOOOOO IIIITTTT! I'm an American living in Paris. There is a reason that people rent for their entire lives here. It is rarely a good idea to buy property here; renting is almost always cheaper. This is even more true if you're not actually living in the property. It is especially true if you are planning to stay short-term and rent out the apartment when you're not there. Even assuming you can rent the apartment (which is a big assumption), you will bleed money. It is far, far more cost-effective to rent during the part of the year that you are in France.
Yes, you are allowed to buy property in Paris if you are an American, though the proofs of income are quite strict, and you are almost always required to have significant funds in a French bank. I will not detail the process of getting a French bank account, which we have done, but unless you make a connection with a subsidiary bank in the US you will need at least a month to open one, as well as substantial cash in hand -- if you arrange a bank account through a US subsidiary (e.g., Banque Nationale de Paris owns Bank of the West), you can expect that the process will take a week or so if your papers are in order and you speak good French and you don't make any grievous cultural flubs and, once again, you have substantial cash in hand. It is difficult for outsiders to get a mortgage in France.
We have been informed that downpayments are 20% minimum, though more is typical, and mortgage terms run for a maximum of 15 years. Closing costs run 6-8% of the sales price, not counting loan application fees and interest on loan between closing and the first payment. Any property buyer in France should be aware that all property is sold without what US buyers consider "fixtures." That means when you buy a property the seller, except in rare and negotiated cases, will remove doors, kitchen cabinets, carpets, light fixtures, toilets, sinks, curtains, curtain rods, towel holders, mirrors, built-in bookcases, appliances, and so on and so forth. The cost of replacing all of these things is a significant extra expense which should always be considered. Furniture and fixtures are much more expensive in France than the US, running between 1.5 and 2 times US prices at the low end. Delivery of furniture and appliances is time-consuming, taking weeks or months. Once the property is purchased you will need to be on site to meet contractors and so on that you have hired to replace toilets and light fixtures, etc. You are responsible for two sets of taxes, the taxe d'habitation (paid by the resident) and the taxe fonciere (paid by the owner), as well as various other taxes, such as the television tax.
Real estate agents do not work long hours as in the US, and have been known not to make offers because it's too late on Friday afternoon. Also, it is unfortunate but true that many French sellers (and landlords) are reluctant to deal with foreign buyers (or renters), though Americans experience less of this particular prejudice than most other foreign nationals.
If you are convinced that you must do this, like some people are convinced that they must own boats, I strongly recommend that you spend at least one extended vacation (a month or more) staying in a rental apartment and speaking with banks, real estate agents, and expatriate Americans about the buying process. If you can arrange to take multiple trips, that would be better. If you don't speak fluent French, it would be an extremely good idea to learn as much as possible before buying. The general advice from every source that I have ever seen about buying property in Paris, however, even if you are living there, could be summed up as follows:
"Aside from the economics, will foreign buyers be sorry if they purchase property in Paris?"
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