AIR DATES: Thursday Oct 4 10:30 pm ET|9:30 CT Friday Oct 5 1:30 am ET|12:30 CT
Cristina is leaving Boston to complete her degree in international law. Her mom is tagging along to help her find a place and settle into a new life in Paris. Cristina's priorities revolve around how best to do her work, but her mom is encouraging her daughter to let her hair down -- a little in a role reversal that's almost as dramatic as the City of Light itself.
My topic (at 2:15 p.m. in the Thurber Room) is “French Property the American Way.” It’s a slogan we adopted for the Adrian Leeds Group because it says it all and it’s true. Let me explain what it means and this will give you some insight into the presentation I’ll be making at “Bloom,” so even if you can’t attend, you’ll have the benefit of the presentation as a reader of French Property Insider.
WHO WE ARE
We are property consultants, but we are also licensed real estate agents. Our “raison d’être” is to provide full service (from soup to nuts) involving French real estate to (mostly) a North American/Anglophone customer. This includes Americans, Canadians, Australians, New Zealanders and the British.
My partner is a younger (than me) guy, Carsten Sprotte, who has been in Paris as long as I have — 24 years — originally from Austin, Texas. When we met, he was operating a short-term rental portal on his own and still is: “Paris-Sharing.com.” Together we formed a French company that has the commercial name of the “Adrian Leeds Group,” the same as my U.S. company.
HOW I GOT HERE
I’m like many of those who came to Paris on a one-year “let’s see if we like it” stay and never left. Over the course of the years, I “wore many hats” in the interest of “survival,” but I had the good fortune of doing two things that led to the primary real estate hat I wear today:
1. I purchased the apartment in which I was already renting/living providing me with “by the seat of the pants experience” and acquiring the resources needed for financing, notarial services and renovation.
2. I had the good fortune of managing projects for an American publisher with a home base in Ireland — International Living. Their readers needed assistance in finding properties to purchase, and at the same time, their owners wanted to invest in Paris and test the rental market. It was then that I began to search for properties, renovate them and place them on the short-term rental market on on behalf of their readers/clients as well as for the owner of the company himself, working with sales and rental agencies and contractors.
All the while I was writing French Property Insider and gathering valuable knowledge and learning the business from the ground up.
WHY WE EXIST
The reason we even exist is because every aspect of making a property purchase in France is different than in the U.S.:
• Different Process • Different Laws • Different Language • Different Currency • Different Culture • Different Everything!
If you aren’t familiar with how the purchase process works, then mistakes are easy to make — and quite costly ones! Any foreign buyer who chooses to “go it alone,” risks a great deal. It is not the job of the real estate agents to hand-hold a foreign buyer. In fact the agents work for the seller, not the buyer. I’ll explain more about that when we talk about how to go about finding property.
RENTING VS BUYING
People moving here often ask us whether they should rent first and buy later or buy a property from the beginning of their stay.
- Allows you more expendable money in the short term: you may need quite a lot of cash to make a purchase and it takes about four months before you can close on a property…
- Gives you time to get to know Paris/France: yes, you will have the time to explore the areas and decide where you wish to buy. And it also gives you time to learn more about the property market and allow the time it takes to find the property, close on it as well as renovate and decorate it…
- Provides security in a long-term investment: there is no question that if you can afford it, real estate (when purchased correctly) provides long-term security for you and your family. More billionaires are made in property investment than in any other way…
- Paying toward your own investment instead of your landlord’s: why pay your landlord’s mortgage when you can be paying your own?…
- Paris is a non-risk market: Paris, in particular, is finite. It can’t go up and it can’t go out. It is a proven non-risk investment. We see annual increases of 5% to 10%.
RENTING LONG TERM
Expect apartments in Paris, furnished or unfurnished, to have rental rates of 35€ to 50€ per square meter per month.
Leases are specifically written by law: Furnished leases are for one-year, unfurnished leases are for three years. Note: Any lease in Paris can be cancelled with a 30-day notice. This is not true in other areas of France where there is not such an acute shortage of housing — where a three-year lease can be cancelled with a 90-day notice.
In France, the laws favor the tenants, therefore landlords need the security that their rents will be paid and their tenants won’t “squat.” This, in turn, makes it even more difficult to qualify as the tenants normally have to provide a dossier of documents to prove their worthiness as well as financial guarantees.
One can expect to pay for three months of rent from the outset: First Month/Last Month/Security Deposit and in many cases, provide a “Caution Bancaire” — or escrow account held at the bank with one year’s worth of rent! That’s a hefty price to pay, so be forewarned!
(Foreign tenants find themselves in the toughest position. Because a landlord has so little recourse should they fail to pay, landlors are often reluctant to rent to foreigners.)
FINDING RENTAL PROPERTY
You can do it on your own (very difficult) or hire it. We offer a service to find long-term rental properties. We use all the possible resources, including “For Rent by Owner,” and the real estate agents that represent long-term apartments (with that comes agency fees).
If your stay is less than one year, we advise signing a one-year lease, then cancelling if necessary with the 30-day notice we just mentioned. Keep in mind that utilities may be included or separate from the rent, depending on how the landlord wishes to handle it.
Normally, the tenant pays the annual Taxe d’Habitation, assessed from whomever inhabits the property on January 1st. The owner normally pays the annual Taxe Foncière (property tax).
Note: we look for good landlords — which is more important than a good apartment!
FINDING PROPERTY TO PURCHASE
This is a longer and more complicated process than for a rental, but first we must determine your goals — how will you use the property? This has a lot of influence on what kinds of properties we recommend.
Then, it all begins with financing — what is your budget? Can you get a mortgage? How much cash do you have and wish to invest? Without having these questions answered, there is no point in starting the search! Your budget must be realistic to the parameters of the search.
Most important to understand is that there is no Multiple Listing Service (MLS) in France. In the U.S., every agent has access to every listing and expects to share their commissions (estimated at 6%), therefore the agents actually work more for the buyer than the seller. In France, every agent has access only to their own listings and does not wish to share their commissions (estimated at 5%)…with the exception of some of the larger chains, such as Century 21, Orpi, etc., which will work within their own group of agencies.
This changes the landscape because an agent in France is only interested in making the sale. They will do or say just about anything to do that, so you cannot trust in their advice. When we perform a search, we arrange to set up the visits by coordinating with the agency, who in turn has to coordinate it with the seller. There are no “lock boxes” to make for easy access. And you’re in France…the agents generally do not work nights or weekends!
Once you find a property you wish to purchase, you or your consultant, will negotiate a price with the seller. There is normally about 5% of the asking price built in for negotiation room, but the seller has a moral obligation to accept the asking price — therefore if the property is “hot” and you believe will sell quickly, you can almost guarantee you will have success in the purchase if you offer asking price…particularly with no “Clause Suspensive” or loan contingency.
THE PURCHASE PROCESS
Here’s how the process takes place:
1. Negotiate and settle on a price with the seller: informal negotiations… 2. Contact the Notaires: do not use the seller’s Notaire — always have your own representation… 3. Place a 10% deposit held in escrow by the Notaire: often the seller will agree to 5% held in escrow, but should you default, 10% will be assessed… 4. Review the diagnostics provided by the seller: as well as the minutes from the past three years of the assembly of the homeowner association… 5. Determine a purchase structure: will you purchase it in your own names or in the name of a French Property Company — an SCI (Société Civile Imobilière)? 6. Sign the pre-sale agreement (“Promesse de Vente” or “Compromis de Vente”): You are given a 10-day cooling off period within which you can retract your purchase… 7. Financing: if you have chosen to take a mortgage, you will have 45 days within which to acquire a loan offer… 8. The final signing of the “Acte de Vente” takes place two to three months later and the property is yours!
DON’T DO IT ALONE
What we or other consultants do:
• Search for property on behalf of the renter/buyer and set up the visits, advise along the way • Provide the due diligence and advise the client to ensure that the client is making the best purchase he can make • Manage the process from beginning to end, plus provide all the resources • Provide a kind of “insurance” that the client will not make costly mistakes
HOW WE CAN HELP
We are property consultants and work for the buyer: “French Property the American Way”
We are Americans and our clients are primarily North Americans and other Anglophones. Our services include:
• Property Consultation • Property Search • Property Sales and Listings • Purchase Assistance • Property Appraisal • Mortgages and Financing • Renovation and Decoration • Property Management • Rental Bookings and Concierge Services
WE’RE MORE THAN AN “IMMOBILIER” — A COMMUNITY
We think of ourselves as much more than just a real estate agency. We offer a real community. Here’s how you can participate:
P.S. For those interested in a long-term rental apartment, please see our apartment listings. Those available long-term are noted as such. Looking a more permanent home? Visit our Properties for Sale site for available listings.
Speaking of Après-Midi: NEXT TUESDAY!
Come join us
October 9, 2018
Cara Black Author of the Aimée Leduc mystery novels
Cara is a bestselling American mystery writer. She is best known for her Aimée Leduc mystery novels featuring a female Paris-based private investigator. Black is included in the Great Women Mystery Writers by Elizabeth Lindsay 2nd edition.
The second Tuesday of every month 3 p.m. to 5 p.m.
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