An Apartment in Paris
Many of us dream of having an apartment in Paris, but making your dreams a reality can be daunting. Even if you know which neighborhood in Paris you want to focus on, the fragmented French real estate market can make finding your home in Paris a formidable task. With no Multiple Listing System (MLS), individual agencies only list their own properties. They can’t and won’t show you properties listed elsewhere. Sometimes properties are listed with more than one agency—often the same apartment will be priced differently at different agencies. This makes for an even quicker sale, often before you have a chance to make your move.
Without a MLS, buyers must go from one agency to another, leaving their contact information and hoping for the best. Should you happen to walk in at the right time, you might be in luck. But since good properties sell quickly, competition for the real gem is fierce, and traditional agencies rarely take the initiative to establish a relationship with you as a buyer.
Furthermore, France has the biggest private seller market in Europe: nearly half of the properties change hands without the use of a real estate agent. So even if you could have first access to the properties listed in the 3,500 real estate agencies in Paris, you would still miss out on a significant number of properties on the market.
How can you be sure you are buying the right apartment at the right price?
The Paris real estate market may seem perilous, but with smart planning, you can navigate the system and find your dream place. Let’s start with the basics.
Determine your goals. Is your purchase an investment you are hoping to rent out when you aren’t there? Or will you spend a substantial amount of time in Paris? If rental income is important to you, then the choice of neighborhood, building and apartment is key to attracting your target renter. If you are buying more for personal use, you may want to be in an area that is quiet at night, offers open-air markets or specialty shops and isn’t crawling with tourists. Budget-wise, the rule is, the more centrally located, the higher the prices. Once you have your objectives firmly in mind, you’ll be in a better position to understand which neighborhoods to focus on.
Check out different neighborhoods in Paris. So often, people stick with the area they know in Paris. Perhaps they once stayed in a hotel nearby, so they come back to that area because it’s familiar. But Paris is made up of many villages, and each has its own personality. Find out what you can about each arrondissement in Paris, then visit the ones that seem most promising to get the feel on the ground. You can make a list of the characteristics you want and hire a real estate expert to be your guide.
Do you prefer high ceilings, French doors and balconies overlooking grand boulevards? Or stone walls, beams and winding medieval alleyways? Do you want to look out your window to see shops, restaurants and bustling sidewalks? Or a quieter street or courtyard where you can leave your window open all night? You might not really need to be walking distance to the Louvre: there are many lovely areas that are a short, easy metro ride away. And if your primary objective is not rental income, your wallet will thank you for looking farther afield.
Make sure your budget is realistic. You may want three bedrooms and three bathrooms with a terrace in the heart of the 6th, but will your pocketbook cooperate? If you want to be taken seriously when you walk into real estate offices, make sure you research prices so your wish list matches your budget. Speak to a mortgage broker. Taking a mortgage can make sense for several reasons: to boost your budget, leverage low interest rates or, importantly, to ensure that you don’t trigger the wealth tax imposed on assets valued over 1.3 million euros.
Conduct a thorough search. You are probably going to own your apartment in Paris for a long time. Don’t rush the search, but don’t get paralyzed by indecision either. You need to see enough properties that you really have a sense of the various price points in your preferred neighborhoods, and so that you recognize a diamond in the rough when it comes along. On the other hand, don’t be fearful of committing to an apartment and lose your opportunity. In this fast-moving market, waiting too long on the sidelines can mean getting priced out of the market, or simply getting too frustrated and quitting, never achieving the Paris ownership dream.
It can be very helpful to have a license buyer’s agent working for you; he or she can scour the market and prescreen apartments so that your valuable time on the ground in Paris isn’t wasted. That lets you focus on seeing those properties that best meet your criteria and spares you a lot of wear and tear.
Negotiate and do your due diligence carefully. The listing agent represents the seller, not the buyer, so it is not in his or her interest to volunteer important information about shortcomings the property might have, or to give you real ammunition for negotiating. Your best bet is to have someone who is fluent in French and French legal issues review the apartment stats, your building meeting minutes, inspection reports and purchase contracts to uncover any problematic issues.
Review neighborhood pricing information so that you know if a property is overpriced.
Be aware that a “low-ball” negotiating strategy typical in US real estate negotiations is likely to backfire in France. The French take real pride in their culture, their language—and often their property. A better strategy is to tell the owner how much you’ve fallen in love with his property and you feel that it’s meant for you—if only the price weren’t an issue! Many French owners prefer to sell to someone they have bonded with rather than just to the highest bidder.
Work with an English-language notaire so that you fully understand all aspects of the contract. If you are working with a licensed buyers agent, he or she can help you locate the right English-speaking tax and legal experts to consult so that the deal struck is in your best interests. The ownership structure you choose for your purchase, as well as the handling of expenses for property improvements, can have a big impact on your property and income tax on the property, as well as capital gains and inheritance taxes years down the road.
Maximizing Your Investment Value
A good investment property in Paris will generate a 4 to 7 percent return on investment, after management, cleaning and maintenance fees. How do you pick an apartment that will be a successful investment? That elusive “it” quality—something that makes the property unique and memorable—is always important when looking for a great investment rental property. And here are other key factors that can help determine whether an apartment will rent well and provide you with a good return on investment.
• It’s important to find the right location, near major attractions, that will appeal to visitors. Central Paris is key; it can’t be too far off the beaten path, though depending on your personal preference, you may choose to be in the center of a neighborhood that generates buzz, or you might prefer to be on a nearby side street so that you avoid overlooking busy roads. A great view is always a good idea, though it will bump your price range up considerably.
• Two or three bedrooms are better than one bedroom. The vast majority of rental properties are one bedroom. Having more than one will increase your rental income while decreasing your competition for rentals.
• The building should be elegant and well maintained. It should feature attractive common areas. An elevator is essential for getting heavy suitcases up to the apartment, as well as for accommodating guests who aren’t able to negotiate a lot of stairs.
• The furnishings should be luxurious but sturdy, slip covered if possible, and a pullout sleeper sofa will allow you more flexibility in accommodating visitors.
• Kitchen and bath must be completely redone to luxury standards. Most apartments in Paris will not have been remodeled properly, but this is not difficult to remedy. Paris Property Group has worked with many English-speaking renovations experts and can recommend one that meets your needs and budget.
• It is important to make sure that you are working with a licensed real estate firm and not a property finder. Your investment is important, and you should make sure you are working with a firm that is both licensed and insured in case something goes wrong with the transaction. Another important factor is that the fees associated with using a licensed firm are included in the transaction price and can be used to offset your capital gains taxes should you decide to sell.
• The right rental agency is also a key component. It is important that visitors are given a proper orientation on arrival so that they will treat the apartment and building with respect and care.
• Make sure that the building co-owners’ association hasn’t voted against the renting of apartments within its building. You can check this information by requesting a copy of the minutes from the last few co-owners’ association meetings. This is a key fact to know before investing because of recent measures taken by City Hall in Paris to discourage short-term rentals. As long as your building hasn’t filed any complaints regarding this matter, it should be fine to rent your investment property as you like.
As you can see, it can take awhile to find the right property, and it’s helpful to have someone on the ground in Paris to make sure you don’t miss out. Great properties that are priced well tend to move very quickly, so it’s important to be knowledgeable about the market and ready to jump when the right opportunity presents itself.
Kathryn Brown is the manager of the Paris Property Group. Contact her if you want to start your own hunt.
Editor’s note: Don’t forget to tell Kathryn Brown at Paris Property Group that Girls’ Guide sent you! You’ll be treated like a VIP.