New York or Paris? Or Both?
I’m learning a bit about New York real estate these days — and learning that it can be a lot different from real estate in the rest of the U.S., but isn’t a whole lot different from Paris.
No, there are no plans to move to New York (and leave Paris!?), but once my New York-based daughter started looking at rental apartments in Manhattan (after living in Brooklyn the last few years), the astronomical rents got us thinking about buying instead.
Let’s face it, why pay someone else’s mortgage when you can pay into your own and have a valuable asset to show for it? Real estate is a tough investment to beat, especially when the ‘location, location, location’ is ‘right, right, right.’
From the other side, we work with lots of New Yorkers looking for their perfect “pied-à-terre” in Paris. Manhattanites tell me they ‘will not do rivers,’ but they will ‘do oceans’ — meaning they will be quicker to hop a plane to Paris than a train to Brooklyn. It’s an old joke, but so often true.
Erica started scouting out locations in New York and decided the West Village fit her European sensibility with it’s cozy little tree-lined streets, steps and stoops and not-so-tall brick buildings. The streets are of “off the grid” — or set on an angle to the other streets in Manhattan in 18th-century style, parallel or vertical to the Hudson River, created long before the Commissioners’ Plan of 1811. Known for being “Little Bohemia,” since the early 20th-century, the “hood” has been the center of the bohemian lifestyle. It’s as close to Le Marais as one might get in the Big Apple. We can relate.
I had always been told there is no Multiple Listing Service for New York City, just as there is none in France, yet I discovered several agencies and publications that try to mimic it. This certainly means finding properties can be as ardent a task as it is in Paris, and you can’t depend on one agent to act as a consultant.
One little studio Erica visited was part of a “co-op.” In New York City, 85% of all apartments available for purchase (and almost 100% of pre-war apartments) are in co-operative buildings. In Paris, I don’t know the percentage, but I’d venture a guess to say it’s much, much higher. The homeowner’s association of a Paris apartment is called a “copropriété” — not very different from the English equivalent word, “co-operative.”
You don’t actually own your apartment in a New York co-op, but instead, own shares of a corporation that owns the building, the shares determined by the size of the apartment compared to the others in the building. Monthly maintenance fees cover building expenses including heat, hot water, insurance, staff salaries, and real estate taxes.
This is true for a property in Paris, too, but there is one huge difference. With a New York co-op, all prospective purchasers must be approved by the Board of Directors and the approval process can be time-consuming and rigorous, requiring extensive information regarding finances, employment, and personal background. “Even celebrities have been turned down by some selective New York co-op boards.” It is also harder to sub-lease a co-op as each building has its own rules, but many limit or forbid subletting.
A copropriété in Paris has no rights to make decisions on who owns or not in the building. When you purchase a Paris apartment, you risk the kinds of neighbors to which you must contend, but prior to the purchase, you have the right to review the association meeting notes to learn how and on what the owners have voted. From this you can decipher a lot.
Like in Paris, Manhattan real estate brokers are not allowed to draw up contracts. An attorney or title company must be employed to do “due diligence.” In France, it’s the “Notaire” who is appointed for this process. The down payment at the time of contract is the same — 10% of the selling price, held in the sellers attorney’s (or Notaire’s) escrow account until closing. Once the preliminary contract is signed, the formal mortgage application can be submitted to lenders.
All this is pretty routine for Parisians, with the exception of the approval power of the Board, who will want to conduct an interview on top of knowing every detail about your private and financial life! The process until closing takes about the same amount of time — 60 to 90 days, that is if you ‘cut the mustard’ for your soon-to-be New York neighbors.
We are working with one Manhattanite who just yesterday made an offer at asking price on a Marais pied-à-terre. The seller is morally obligated to accept asking price, eliminating bidding wars so common in the U.S. I’ll bet he finds the process easier than in New York, and a whole lot less expensive on all counts!…price per square foot/meter (even at today’s rate of exchange), lower monthly maintenance fees (much!), lower taxes (much!)…and the ability to sublet if he likes, making it a perfect rental to let someone else pay the mortgage!
So, what would you do? Would you want to own in New York or Paris…or both?
A la prochaine…
Editor, Parler Paris
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