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A Mortgage That Makes French Property Profitable

Volume I, Issue 43

During the last Working and Living in France Conference, there was much discussion about variable rate mortgages vs fixed rates mortgages. With interest rates as low as 3.25% (with a 30% deposit on a loan from 7 to 17 years) I made a trip to see my banker this week — the lender who holds the mortgage on my apartment, Banque Patrimoine et Immobilier.
The question was: Is this a good time to fix the rate while rates are low?
This wasn’t a simple question to answer. The variable rates are based on the EURIBOR (Euro Interbank Offered Rate), the rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank. The fixed rate is based on the TME (Taux Moyen des Emprunts d’Etat), the yield on the secondary market of Government Bonds at the fixed rate for more than 7 years. So the current variable rate on my mortgage of 3.99% would increase to 6.15%. Changing from a variable to a fixed rate incurs no penalties and I’m still able to pay it off early with no penalties, but once the rate is fixed, there’s no going back.
The decision was made to stay with the variable rate for another period, watching the rate along the way, but the prediction is that the rates will stay low at least another year. I’m hanging in.
On another note in our meeting, we learned that legal tax-paying residents of France can get mortgages of 110% for investment property — like apartments designated for rental and not for personal use. This means that there’s no down payment and the Notaire fees are covered.
We did the math: You purchase a 200,000 euro apartment and borrow 220,000 to cover the costs. You need another 10% for renovation and furnishings, so your out-of-pocket is about 20,000 euros. A 20-year mortgage at the variable rate is about 1,600 euros a month. You rent the apartment on a weekly basis and get at least a 50% occupancy rate at 1200 euros a week. You pay a rental agency 30% to manage it and fill it with tenants. So, you net 21,840 euros from the rental. Your mortgage is 19,200 euros. That leaves you with 2640 to cover utilities and taxes.
In essence, you’ve broken even. If you can furnish it for less, you have less out-of-pocket expenses. If you can yield a higher occupancy rate, you can earn income. Property in Paris has risen 13.9% this past year. If the trend continues, at the end of the mortgage, the apartment will be worth 2,700,875 euros and you’d have paid in 384,000 euros, yielding a profit of 2,316,875 euros, or 603%. With the change in the capital gains tax laws (no tax paid after 15 years of ownership), you won’t pay any tax when you sell, either!
Now, I’m sure that one of you smart readers is going to enlighten me on what’s wrong with these numbers…but I’ll bet, that no matter how they play out, a profit of some kind is in the picture. Tell me, am I wrong?

A bientôt,

Adrian Leeds
Editor, French Property Insider
Email: [email protected]

P.S. For more information about getting a mortgage or to contact BPI or the other lenders we recommend, visit https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/loan
Volume I, Issue 43, December 4, 2003
In this issue:
* San Francisco Here We Come — March 19 – 21, 2003
* Getting Ready to Pay the Tax Man in 2004
* Can the Landlord Sell My Apartment Out From Under Me?
* The French Exiles in Pennsylvania
* Rebuilding 18th-Century Walls to Fit 21st-Century Windows
* Renovation Work Continues to Benefit from Low Taxes
* A Currency Exchange Update
* Hot Property:
* Property For Sale: A Leaseback in Saint-Malo
* General FPI Information…

In the next week or so, we’ll be announcing the details of our Living and Investing in France conference in San Francisco March 19 – 21, 2004.
Here’s what you can expect…starting with Friday afternoon and continuing through all of Sunday, you’ll hear presentations by experts on the topics of: * Obtaining the Right to Be in France * Making the Move * Finding Property * Buying and Owning Property * Renting Your Property for Profit * Learning About the Leaseback Program * Getting a Mortgage * Smart Offshore Investments * Minimizing Your Tax Liability * And more!
You’ll have an opportunty to ask questions and learn all you’ll need to know to make your dream come true to live in France or just be a part of the profits on owning property there.
We’ll open with a cocktail party, enjoy a dinner together and discover all the fabulous atmosphere San Francisco has to offer.
Brought to you by and hosted by the International Living Paris Office…visit Live and Invest in France for information or email us to be on the mailing list for more information as it unfolds: [email protected]
In just a few days, Sunday, December 14th at 2:00 p.m. (Eastern Standard Time) to be exact, you can participate in our quarterly FPI conference calls. International Living’s various satellite offices around the world began providing this service earlier last year. They have proven to be very successful and valuable for the participants.
Talk in person with Adrian Leeds and Jocelyn Carnegie of our Paris Office to learn what parts of Paris are HOT and what parts are NOT…where will your property investment grow the fastest?…what parts of the city yield the hottest rental returns?…what parts of Paris are best to live in?…what parts of Paris give you the most space for your money…and anything you want to ask about property in the Paris!”
Here are the instructions for participating in the call:
Conference Date: Sunday, December 14th 2003
Conference Time: 2pm EST
Dial-in Number: 1-503-767-1200 PIN Code: 18330
1. At conference time, dial the Conference Dial-In number above.
2. At the prompt, enter the PIN Code followed by the # key.
3. You will hear music until the Leader enters the call.
To mute/un-mute your individual phone line, press * 6.
Instructions are also on the FPI website. You’ll find the link under the “Subscribers Only” section on the left of any page.
You’ve heard his name from us many times before. Jean Taquet is a Frenchman married to an American who knows both sides of the Atlantic coin. He’s a French jurist and an associate member of the Delaware Bar Association, specializing in giving advice on civil, criminal and commercial law in France to (mostly) curious Americans.
Jean is a regular speaker at the International Living Working and Living in France Conferences on the subject of immigration — a very involved subject! And for the last 9 years, Jean has published an informative Q and A column that we republish each month online and as an Insider Paris Guide in the form of a compilation of all the years in the “The Insider Guide to Practical Answers for Living in France” — it’s fascinating reading!
Today, we are offering up one small portion of his December column — but don’t hesitate to read the entire column by clicking here.
The New Year is coming soon. It is important to know that two local taxes, the lodging tax (taxe d’habitation) and property tax (taxe foncière), are calculated according to who lives in or owns a given property on January 1 of a given year. Thus, if you’re planning to move into a rental property or buy a property near the year’s end, it could be useful to delay the contract signing for a few days, until after the first of the year, to avoid paying the lodging tax for this year. Make sure you ask the help of a professional in arranging such a delay – do not plan it on your own. Real estate agents and notaires are very familiar with this issue and will often assist you at no extra cost. While these are not taxes for which you can request payment deferrals if you are in serious financial difficulties, you can elect to spread your payments out in monthly increments over the year. This is not a bad idea, since it ensures that you never default on a payment and thus avoid any negative consequences of special circumstances (such as being away from France during the autumn and not being aware of having received the bill).
I am a long-term resident in France and have rented my apartment for years. I took it without signing any contract and, since it is not mandatory anymore, I do not get any receipt for my rent payments. I do pay dutifully every month before the end of the month.

I just received a letter from the landlord, just a few lines sent by normal mail, telling me that the apartment will be put up for sale soon, and that I should move out within two months. Can I ask for an extension? I do not see how I can move out that quickly.
Under French law, if the tenant can prove that the rent is paid periodically, directly or not, to the landlord, then, even in the absence of any contract, a lease exists. Not only that, but, by default, the lease is assumed to be a bare-wall (unfurnished) apartment lease, which is heavily regulated, so much so that the contract practically replicates the law. Therefore, given what you tell me, this is the analysis I make of the situation:

The law states that selling the property is one of the three grounds for which the landlord can terminate the lease. The notice must be sent six months before the anniversary date of the lease, must state the selling price and must give you the first option to buy. This letter must be sent by registered mail or delivered by “huissier” (bailiff). The law states that any lease is for three years if the landlord is an individual who is not a professional in the real-estate business, or six years for real-estate professionals.
In other words, the letter you received has absolutely no legal value, since none of these requirements has been met. There is absolutely no need to rush to find new lodging. On the other hand, to be on the safe side, you should answer this letter to remind the landlord of your rights. Your letter should be accompanied by proof of the existence of the lease (i.e. proof that you pay the rent – copies of the rent checks or copies of bank statements showing wire transfers). In any case, you are safe in the apartment until the next anniversary date.


View of the Susquehanna River in Northeastern Pennsylvania looking towards French Azilum. Taken from the Maire Antoinette Lookout on Route 6 West.

By John Alaimo
Landscape and history have been a part of the heritage of the Endless Mountains, and to a great extent, has shaped the past of the people who live there. Some areas have an abundance of landscape and others only history. An area located in Bradford County (Pennsylvania), outside the village of Wyalusing has both, in addition to a historical mystery that has never been solved.
It was late afternoon when I made the turn outside Wyalusing, heading for French Azilum, crossing the bridge and turning right onto Route 187. This beautiful country road led to the small village of Terrytown, a scattering of half a dozen houses in the rich farmland that borders the river. There was a magnificent field, whose deep green mantle stretched to the far horizon, so I stopped the car to photograph it. Just opposite, an elderly couple was sitting on a bench in their backyard, enjoying the tranquility and faint whisper of the afternoon breeze. I drove on until I came to Queen’s road, turned right and arrived at the place known as French Azilum. For a moment I stood looking at this grand house and thought of the strange tale that history has left us.
It was autumn in 1793 when a group of French exiles from Philadelphia, arrived at the bend in the river to establish a French settlement. They came to build this village as a safe haven, an asylum for their Queen, Marie Antoinette and her two children. This was the time of the French revolution and Paris was in turmoil. The angry mob had already beheaded the King.
By the following spring there were over two dozen-log houses built. But the most imposing structure was the great log house known in French as “La Grande Maison.” It was the largest log residence at that time in America, rising two stories high. The first floor had only one large drawing room that served as a gathering place for social events at that time it was rumored to be the future home of Marie Antoinette and her family. But, that was not to be. The Queen was executed on the guillotine and the tragic news didn’t reach the settlement until after the house was completed.
For many years afterwards, the great log house was the scene of social gatherings and elegant parties. Candles flickered everywhere, casting their golden light onto young couples whose shadows danced across the walls. A small orchestra played music, and the great drawing room echoed with the laughter and voices of the little group of devoted exiles, still loyal to their dead Queen. Outside, the distant music blended with the slow moving waters of the nearby river. All the manners of the French court were transported to this hidden river valley, isolated and surrounded by untouched forests. In years to come the settlement went into decline and many of the exiles moved to other parts of America, some returning to France. There is nothing left of the original structures and the Great Log House has disappeared. The story of Marie Antoinette has never been verified.
John LaPorte, a U.S. Congressman, built the house that stands on this site today. He built it in 1836 and is now a museum that pays tribute to that devoted band of French exiles and to the legend of Marie Antoinette. As I walked through the rooms of this delightful home, sunlight filtered through the lace curtains and melded with the smell of old linen. The rooms are well-attended with period furniture and there is an atmosphere of history and tragedy. The wooden floors creaked with age and on the wall is an oil portrait of Napoleon. It seemed the only link with the historic past. I went outside where the front of the house faces the river. Well-kept lawns stretched towards its banks. Far off I heard the flowing water. A perfect setting, I thought, for a French Queen.
The Marie Antoinette lookout is 3 miles west of Wyalusing on Route 6. You can park your car and walk over to a low wall and look out at the breathtaking panorama of the surrounding hills and valleys. In late summer I paid a visit. The day was bright and clear and the colors of early autumn were beginning to appear. Looking beyond the river, I could see where the small settlement once stood. Down below, the sparkling waters flowed, and off in the distance I saw the La Porte house that marked the boundaries where the French loyalists dreamed of their safe haven. As I turned to go, a breeze began to blow, and in the distance, down across the valley, I thought I heard the laughter and music that drifted out from the house they called La Grande Maison.
EDITOR’S NOTE: John Alaimo is a reader of Parler Paris and French Property Insider and is a student of the Ultimate Travel Writers Course. Click here for more information: http://www.thetravelwriterslife.com/ilpparis/

By Adrian Leeds

The moral of the story is to expect the unexpected.
This past week, the almost 4-meter-high windows were hoysted up to the third floor rue de la Huchette apartment for installation. I have no idea what they weighed, but I’d bet on several hundred pounds each. The workman can attest to this, who maneuvered them them in and installed them.
The windows are part of the project to sound-proof the apartment, which includes adding a new set of double-paned and insulated windows in both the living room and bedroom and insulating one wall between this apartment and the neighbor’s.
Monday I received a call from the attorney whose office is just below the rue de la Huchette apartment on the
second floor. He’s a very gentle and kind young man who is President of the homeowner’s association for the building, a concert pianist and an expert in historical architecture. He has new cracks in his ceiling — seemingly from the work happening in our apartment and the weight of the windows on the floor, much to his dismay. Luckily, we’re well insured!

Meanwhile, the workman installing the giant plates of steel and glass have discovered several extra days of work unexpected. In this 18th century building, not one wall was vertically straight. Each window was not only a different size to fit the odd-shaped spaces, but now each wall must be reformed and plastered to be a perfect right angle.
We have our first tenants arriving in less than two weeks, so Porter Scott is very busy arranging the finishing touches. Furniture is being delivered, covered in plastic and moved into corners while the sound-proofing work is being done. Dust is everywhere and that means a more than thorough cleaning before they arrive.
But, I have no doubt it will be not only ready for occupancy, but will be one of Paris’ most luxurious and elegant short-term rental apartments in the Latin Quarter.
EDITOR’S NOTE: To book your stay at rue de la Huchette, visit Huchette or contact Porter Scott
Just Tuesday of this week, Prime Minister Jean-Pierre Raffarin declared at the French National Assembly that it would uphold the decision to prolong the reduced rate of 5,5% VAT (Value Added Tax) for the building sector. This means that craftsmen can continue to write their estimates on the basis of 5,5% VAT, however there is no insurance of this beyond six months. Such a decision needs a formal proposal to the commission which has already refused a two-year extension of the tax reduction experiment.

If you have basic questions concerning apartment and home renovation, contact our resident expert Derek Bush by visiting https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/services.html

A service of http://www.xe.com
Subscribe for free at: http://www.xe.com/cus/

Rates as of 2003.12.04 11:38:21 GMT.
1 U.S. Dollar equals 0.828765 Euros (0.839455 Euro last week)
1 Euro equals 1.20661 U.S. Dollars (1.19125 last week)

1 U.K. Pound equals 1.42776 Euros (1.44121 Euros last week)
1 Euro equals 0.700397 U.K. Pounds (0.693860 Pounds last week)

The International Living Paris Office can help you secure a mortgage in France with interest rates as low as 3.35%.
Visit https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/loan for more information or contact us

We are constantly looking at properties for sale to offer to our subscribers only. Each week we will be bringing you one or two properties we believe are especially worth your consideration. As a subscriber, you will have an exclusive first look at these.

Properties sell very quickly in Paris. The best way to find the apartment or home of your dreams is to allow us to do a preliminary search before your arrival so that you visit only the best of the properties and can make a decision quickly.

To learn more about our property search services, visit: https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/propertyconsultation.html
See photos of the properties by visiting the website at https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/subscribersonly/currentissue.html
To access any password protected pages, the username is: fpiuser and the password is: paris1802

*** PARIS 1st – Palais Royale
Situated near Palais Royale on rue Villedo. This 1st floor apartment of 2 rooms and 45m2 needs entire renovation.
Asking Price 195,000 euros
Serious inquiries email: Paris_1st_4-12-03

See photos of the properties by visiting the website at https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/subscribersonly/currentissue.html
To access any password protected pages, the username is: fpiuser and the password is: paris1802

All of the following apartments are for sale by owner. There are no agency fees incurred with the exception of a finders fee we place to connect you with the owner and assist you in the purchase. We have chosen two very high level properties and two very low level properties, but both in very rentable areas of the city, should you wish to make your investment profitable.
The prime rental neighborhoods are the 1st – 8th arrondissements, but each depending on location within each arrondissement. The most requested is the Ile Saint-Louis, second the 6th, third the 4th. The most expensive property in the city is the Place des Vosges in the 4th, Ile Saint-Louis (also 4th) and the 6th arrondissement.
Situated next to the beautiful historic town of St Malo, this SEA-FRONT RESIDENCE will accommodate the growing number of tourists coming to the region and also, the clients of the widely reputed health spa of St Malo.
Set in a Park of 1,5 acres with mature cedar trees, this residence will comprise luxurious one bedroom suites and a covered heated swimming pool.
With a spectacular sea view and just 5 minutes from the heart of the town, this beautiful residence is a great investment boasting a high annual net yield in an exceptional location.
1 bedroom apartment from 145 200 Euro
(price excluding VAT)

– Turn of the century style building
– Direct access to the beach
– Very quiet surroundings
– Very residential area

For more information, visit Saint-Malo or contact Beatrice Dornier, Conseil Patrimoine
*** DINARD – On the Gulf of Saint-Malo
This 87m2 duplex apartment has direct access to the beaches of Dinard and Saint-Malo. Well laid-out, the property has one bedroom, kitchen and large living space. Low-cost airline Ryanair has scheduled flights from London Stansted airport to Dinard.
A snipet from the Ryanair website:
London-Stansted to Dinard
Fares from £17.50 (under $30.00!)
Booking Period: Wed 03 Dec – Mon 08 Dec
Travel Period: 06 Dec – 18 Dec & 05 Jan – 31 Jan
Applicable Days: 17.00 Mon , all day Tues, Wed & Thu & Fri until 09.00
Advance Purchase: 3 Days
Weekend Supplement:: Various route by route from £5-£40
Go to http://www.ryanair.com/ for travel information
Asking Price 213,370 Euros
Serious inquiries email: Dinard_4-12-03
*** PARIS 11th
Large 2-room apartment of 61m2 with a separate bedroom. Expansive views. Cross ventilation. Recently renovated. On the 6th floor with an elevator. Large kitchen.
Asking Price 259 000 euros
Serious inquiries email: Paris_11th_4-12-03
*** PARIS 9th – Sacré Coeur View
Near Place Saint-Georges and the Métro. View of Sacré Coeur. Spacious 2-room apartment of 72m2 with kitchen, bedroom and bathroom and a balcony of 6m2. Elevator, alarm, safe and cellar,AC. The main apartment is 60m2 and a fully equipped studio of 12m2. In addition there is a service bedroom and cellar.
Asking Price 350 000 euros
Serious inquiries email: Paris_9th_4-12-03

*** PARIS 18th – Montmartre on foot

Within walking distance of Montmartre. A 2-room apartment of 35.5m2 on the 2nd-floor of a fine traditional building of 1900. Parisien tradition with parquet flooring and decorative moulding. Renovation work required including installation of bathroom.
Asking Price 123,620 euros
Serious inquiries email: Paris_18th_4-12-03

This is your opportunity to meet twice a month, often with local
professionals who can answer your Working and Living in France
questions. You are invited to come for drinks and share your questions and comments about what it takes to create a life here, own property and enjoy what France has to offer. It is also an opportunity to
network with other Parler Paris readers.

For a detail description of the past meeting and for more information about Parler Paris Après Midi, visitb https://adrianleeds.com/wp-content/uploads/newsletters/parlerparis/apresmidi.html
Don’t forget that with your FPI subscription you are entitled to a discount on the purchase of any Insider Paris Guides. You’ll find details of the guides at http://www.insiderparisguides.com. When ordering, a box will pop up allowing yo
u to enter the following username/password

Order more than one guide at a time and you will receive an additional discount!
Username: propertyinsider
Password: liveinfrance

If you are seeking to rent a furnished apartment for a week, a month or a year or you have an apartment you wish to rent, contact Adrian Leeds
– FPI Website: To access any password protected pages, the username is: fpiuser and the password is: paris1802. If your computer utilizes cookies, once you log into a subscriber only section, the login information will remain active for seven days, after which you will have to login again.
– Past issues of FPI are available on the website. You will find the “Past Issues” link on the left under “Subscribers Only” or by going to https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/subscribersonly/archives.cfm
– To receive your free French Leaseback Report or the Paris Property Report, click on https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/subscribersonly/reports2003.cfm and download the pdf versions.
– Instructions for upcoming conference calls are on the FPI website. You’ll find the link under the “Subscribers Only” section on the left of any page.
– Get In On The Discussion: Care to weigh-in on current HOT topics of discussion on France? Get in on or start your own thread on our bulletin board at http://www.agora-inc.com/forums/index.cfm?cfapp=15
2 lovely apartments in the 1st arrondissment across the street from the Tuileries Gardens, 3 minutes form the Place Vendome. Available for rent by the week or longer term: 6 months to 1 year. 2-3 bedroom duplex w. 2 baths/ Tuileries view. OR 1-2 bedroom same building. Both are elevator accessible, non-smoking and no pet properties.
To check them out and for reservation and contact information go to http://www.youlloveparis.com


Elegant, Tasteful, Calm at Saint-Germain-des-Prés, 6th arrondissement, one bedroom apartment, sleeps 4. Amenities: Fireplace, Phone, Cable TV, Full Kitchen, Microwave, Refrigerator, Cooking Utensils provided, Linens provided, Washer & Dryer, Bathtub with Shower.
For more
information, visit:
https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/rentals/scott.html or contact

Stay in your own 17th-century pied-à-terre in the heart of Saint-Germain-des-Prés, Paris, by the week or month. Sleeps 4. Newly furnished and redecorated. Totally charming. From $150 per night. Visit https://adrianleeds.com/wp-content/uploads/newsletters/frenchproperty/insider/rentals/mazarine.html or
contact Porter Scott at Mazarine

Guest Room or Two-Bedroom Apartment Located in a 17th century Le Marais Hotel Particulier, this 70 square meter apartment two-bedroom apartment with lots of light is nicely furnished and is perfect for a single woman in the freshly renovated guest room when owner Adrian Leeds is in or for up to 4 people when she’s traveling.
The Guest Room is offered at $575 per week ($250 deposit required). The Entire Apartment is offered at $875 per week ($350 deposit required — AVAILABLE MOST DATES THE SECOND AND THIRD WEEK OF MARCH.) References are required.
Pictures and more details available at https://adrianleeds.com/wp-content/uploads/newsletters/parlerparis/apartments/rentals/leeds.html
For information and reservations email: ABL_Apartment

In the heart of the Marais extremely charming 42 square meter studio with loft. Fireplace, exposed beams on a beautiful 17th century courtyard.
All amenities: telephone, fax, Internet, cable TV, washing machine, fully equipped kitchen, housekeeping once a week, piano allure
Métro: Arts et Métiers 600 euros per week / 2000 per month available year-round

Contact: Alexis Magaro
To convert square meters to square feet, multiply 10.763 by 3.281 and for more conversions, refer

If you’re not a regular reader of the Parler Paris daily e-letter, and would like to be, simply enter your e-mail address here (it’s free!): http://www.internationalliving.com/signup.cfm
* * * * * * * * * * * *
Copyright 2003, Agora Ireland Publishing & Services Ltd.


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