Owning Property…Is it Worth It?

If you read our two other Nouvellettres® that publish every Monday and Wednesday, then you already know about both the property dreams and nightmares in which I am living. It seems that I am the “Poster Child” for property issues, which is great for you, even if both are good and bad for me.

What I mean by that is that because I get to experience so many ins and outs of property ownership, we have first-hand experience, as well as those of our clients, to add to our caldron of knowledge…and that benefits our clients! We use this experience to help them navigate through the process and avoid the pitfalls that we’ve already fallen into.

One reason I get myself into so many entanglements is because I like owning property and am not fearful of the responsibility. Property ownership has ultimately been the best thing I ever could have done, not just from the pleasure of having our own nests in which to live comfortably, but from a financial standpoint, too.

Let me tell you the true story…

In 1997 I moved into a rental apartment in Paris that I was able to purchase three years later when the owners wanted to sell it. I was clueless about what I was doing, but emotionally didn’t want to leave the apartment and did everything in my power to buy it. It took nine months to figure out a way, but fortunately, a British bank (Woolwich, which later became Banque Patrimoine et Immobilier) granted a mortgage and it became ours.

Prices in Le Marais were at a serious low at the time and the rate of exchange was in our favor. The timing was more than right, because the property increased in value over a amount of time, particularly in Le Marais. By 2006, it was worth so much more that the same bank granted me one large loan to buy two properties (it was their idea)—both designated to become rental properties…because at that time, the short-term rental market was booming. It was for investment.

Those two properties became the foundation for our short-term rental business. One of the properties was a tiny studio located around the corner (16.5 m2 that I called “Le Provençal”) that generated more ROI than any other property we represented. (See the story from 2006)

The second property was a serious labor of love—a “viager” that I bought for next to nothing, spending five years of hard work to acquire it and renovate it, then turned it into a jewel. It rented very well and I loved it. It was located in my own building, but in a part with an elevator, had a large terrace and skylights. I was able to air-condition it. With it came a “chambre de bonne” (servant’s quarters), a storage closet and two cellars. It was a very special property…my “beach” in Paris that I called “La Paris Plage!” (Read 10 chapters of the five-year story)

In 2009, the rate of exchange went as high as $1.60 to the euro. Americans weren’t buying much property in France for that reason, as well as the 2008 financial crisis left their reserves empty. But again, the properties in Paris had increased greatly in value and rentals were doing very well. The bank came back to me one more time with an offer to lend me more, suggesting I buy a property in New York for my daughter who was living there at the time. At $1.50 to the euro, it was a smart move that made us both quite happy. We chose the West Village for its similarity to Le Marais…part of Manhattan that is more “human scale.”

Two years later, the properties had increased in value yet again, especially the viager. The bank offered up another loan that paid 100% for an apartment in Nice. Nice was on my radar as a future retirement spot and a way of expanding our business. It took years to find the right property because I didn’t have a team of search consultants to ferret out the best properties, but finally I found one that rang my chimes.

I purchased it in 2011, renovated it, again “to the nines” and rented it. I am a firm believer in spending more to create the kind of living space that everyone dreams of . . . even if it might mean overcapitalizing it. Properties like this rent better and sell faster, plus are more enjoyable. In addition, I’ve had the very good fortune of working with the best creative and construction team I know—Martine di Mattéo and her crew.

The bottom line was that the rents from the two Paris rental apartments, still doing very well, along with the one in Nice, generated enough money to pay the mortgages of all five properties. That’s the biggest risk— will the rents cover the costs of ownership and in France, the carrying costs are very low, making profits easier than in many other places. So, property was floating my boat and everyone was happy. The truth is that I started with only about $40,000 in cash (the initial down payment when I purchased Saintonge) and ended up with more than $3 million worth of property! Can you imagine? Even I had a hard time getting my head around this!

In 2015, a few things happened that led me to sell both Paris rental properties. The city was seriously cracking down on short-term rentals and they sent a controller to investigate me. The short-term rentals were no longer legal if not a primary residence, and I had to turn them into long-term rentals if I wanted to keep them. But long-term rents with rent control (also newly installed by the city) meant an inability to generate enough revenue to cover their costs.

At the time, I had one of those French lawyers who couldn’t think outside of the box and couldn’t see a way around the problem. If I had known then what I know now, I could have given him the solutions that he couldn’t think of himself…but this is all part of the experience I’ve gained since then, that even he didn’t have…and the reason I am telling you this! Nonetheless, selling them both, even if emotionally difficult, put cash in the coffers and that’s when I started working with Brian Dunhill of Dunhill Financial to make the portfolio grow. (Brian is the smartest financial advisor I’ve ever met and if it weren’t for him, I wouldn’t be telling you this now.)

Buying an apartment in Nice turned out to be the foundation for our budding business in the Riviera town. At the time, I had no idea if I’d like spending time in Nice or if business was even possible there. But my goal was to develop it along with the American community, that at the time seemed so disjointed. My vision to expand our territory and to see the community come together has become reality…and not only do I absolutely love living part-time in Nice, but business is booming and the community has grown by leaps and bounds. (Ask any of our clients there how much they love Nice! It’s simply not the same town it was even 10 years ago!)

A couple years ago, post Covid-19, my daughter and I sold our New York City apartment when she had moved to Los Angeles and our rights of renting in a co-op building ended. (Anyone living in a co-op in New York knows all about the strict rules! ) We benefited from the rental of the apartment during that time, but there was a two-year maximum rental based on the by-laws. We were fortunate to sell it to the tenant who already had board approval! We did well because of the rate of exchange when taking out that French mortgage at 150%, not because of appreciation.

The structural issues you’ve been reading about at my Paris apartment are an acute part of property ownership. That could never have been predicted, considering it had stood the test of 400 years and showed no signs of any problems when I purchased it. Part of the reason I love that property so much is how I admire its 17th-century beginnings and the feeling one gets from all the lives that passed through its doors. I learned that at one time a dentist lived there who saw patients in the living room and of course, at one time the building had been inhabited by many Jewish families who had been deported. I felt their spirits.

Yes, the process of the structural reconstruction has not been fun…in fact painful…but there’s no other way to make it happen. The work we are doing there is a testament to the protection of the heritage of Paris, and who better than me to take part in that? When all is said and done, it will be like a brand new property in an ancient building in one of Paris’ chicest districts. I’ll love it even more.

Meanwhile, I am in the process of purchasing more property to enhance our lives and make smart financial moves. I wanted a bigger apartment in Nice and my daughter wants to come live in Paris again. She will need a place to live, too . . . and not with “mama.” She could rent, but buying property is an intelligent way of moving assets to her free from French inheritance tax. The properties can be purchased in her name, with me keeping the rights of usage till my death, so that when I die, she has clear title, tax fee. The investment coffers will empty as we fill our lives with property in which to live and enjoy. Once I’m no longer here, Erica can sell the properties she doesn’t need or want and then do whatever she wants with the money—like set up the future for her own child!

Sure, property ownership is a lot of work and expense. And sometimes even difficult and stressful. But, is it worth it?

Last week, if you read the Nouvellettres®, then you know my heart was torn out of my chest when I saw the destruction of the Saintonge apartment. They destroyed more than we anticipated, or what was planned, and I have a new battle to face. At this stage, I take such circumstances in stride…I can only do what I can do and leave the rest to fate. Thinking positively has always manifested the best outcomes—at least this is what I’ve discovered over the years.

On the upside, Monday night I went to visit the Nice penthouse, this time at night for the first time to see the views. I’d only seen them during the day time and could only imagine what the night might bring in. I was literally star-struck with the lights twinkling on the hills and the full moon bright behind the clouds hovering over the Mediterranean Sea. The reconstruction work had already begun and this is just the beginning of watching how the caterpillar will turn into the butterfly.

Yep, it’s an emotional roller coaster and quite honestly, the highs and lows are what make the ride exciting! Would I change anything? Likely not.

Again, you ask if it’s worth it?

The answer is yes! You only live once. You don’t take the money with you… and besides, it’s only money. There are so many things in life more important than that. And you can either do nothing and end up being bored, or you can do it all and feel ultimately fulfilled.

Personally, I don’t want to miss a single thing in this short life span…if I can help it.

How about you?

A bientôt,