- Why Invest in French Real Estate?
- Income Opportunities with French Apartments
- Choosing the Right Investment Strategy
- Case study: Cost Breakdown of Buying an Apartment in France
- FAQs
Why Invest in French Real Estate?
French real estate investment can be a lucrative venture for three reasons.
- France boasts a steady property market that has remained vigorous amidst global economic ups and downs.
- Its thriving tourism sector guarantees a constant need for rental properties in sought-after tourist spots.
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The country’s high quality of life and enduring cultural allure make it a desirable destination for long-lasting financial commitments.
As a general trend, real estate value in France has often risen over time, especially for long-term growth, despite occasional fluctuations or due to global economic changes.
Before investing in real estate in France, it is of utmost importance to grasp the legal and tax ramifications of property ownership in the country. Seeking guidance from professionals about French real estate legislation is strongly recommended to guarantee adherence to all rules regarding investment approach.
Income Opportunities with French Apartments
Purchasing a property of your choice and preference opens up multiple avenues for a steady income stream:
- Rent it out, particularly in locations with high demand.
- Joining platforms such as Airbnb or hiring the services of property management companies.
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Rent out the property as a vacation getaway.
In fact, some property holders rent their apartments during peak tourist seasons while reserving them for personal use during off-peak seasons.
When buying a property for rental purposes, remember to compare the rental yields to avoid mistakes with selection. This will tell you whether your real estate investment will be profitable in the long run.
Thorough market research and a good grasp of local regulations are paramount in both scenarios.
Choosing the Right Investment Strategy
For investors worldwide, purchasing French real estate is an alluring opportunity. First, do you know where you want to make investments? Next, you must precisely know your budget and what kind of properties you can afford. The cost of purchasing a five-unit historical building in the heart of Paris will be significantly higher than buying a single unit in the countryside.
Third, numerous companies, such as Bevouac, ImAvenir, Artae, etc., may assist you in finding and purchasing a home in France from overseas. The primary drawback is that they charge a fee, usually ranging from 6% to 8%. But they will handle everything.
Fourth, what sort of investment are you looking to make? Is it a growth investment (rural cities, higher risk but better rentability) or a patrimonial investment (excellent location in big cities, low risk but lower rentability)? So, always be aware of the compromise between the potential return and risk.
There are two different kinds of rentals: furnished and unfurnished. Each has a different tax status. Starting with furnished apartments is probably safer if you live overseas. Why? Because if your property is furnished exclusively, you can amortize it and deduct all charges, purchase fees, and interest. Look at the LMNP régime réel; it’s an excellent position to start with.
For many investors, obtaining a mortgage in France is a prospective option. French banks provide a range of mortgage options with attractive interest rates and have a well-established system for lending money for real estate transactions.
Case study: Cost Breakdown of Buying an Apartment in France
Let’s say, as an illustration, you buy an apartment in France for €220.000. On top of that, you’ll have to take into account several fees associated with this particular acquisition.
(The following estimate is not based on actual costs but is only a sample)
| Key Costs | |
| Notaire Fees | Between 7% and 8% for resale and 3% for a new property |
| HOA or Syndicat de copropriété: | €600 |
| PNO Property insurance (PNO — Propriétaire Non-Occupant) | €185 |
| GLI Insurance for non-payment of the tenant (GLI — Garantie Loyers Impayés, about 2.5% of the rent): | €255 |
| Property tax | €521 |
| Accounting fees | €250 per year for an LMNP |
| Agency management fees (around 7% of the rent, plus about half of the monthly rent for each turnover) | €946 |
| Bank account fees (about 2.5 euros per month to maintain a bank account) | €24 |
| CFE (Cotisation foncière des entreprises) | depends on the location |
| Furniture | €11.000 |
| Bank Loan costs | Between €500 and €1500 |
| Hypothèque | About 1.5% of the loan amount in case you are unable to repay the loan |
| Loan insurance | Often less than 0.2% for basic death coverage |
| Courtage Fees | About 1% of the loan amount |
FAQs
1. Is it a good time to invest in French real estate?
Yes, now might be a good time to consider investing in France’s real estate. However, this decision hinges upon several key factors. Right now, mortgage interest rates in France are around 3.40% for loans lasting 20 to 25 years, which is considered high compared to recent years. For example, rates were very low after COVID, between 0.80% and 1.06%. However, even though interest rates are higher now, the value of real estate in France has gone up by 30% over the last decade. So, while French people may find these rates high, people from other countries (where rates could be even higher) might still think the rates in France are pretty low. France also provides a range of tax benefits for property investors, such as the “Loi Pinel” scheme for newly built properties or the LMNP (Non-Professional Furnished Landlord) status for furnished rentals.
2. Can non-residents get mortgages in France?
Yes, non-residents can secure a mortgage in France, as French banks generally extend their lending services to non-residents.
3. What are the best cities in France for property investment?
France has numerous “the” best cities because it is one of the most tourist-friendly countries in the world. As France is incredibly varied, the most popular places to live are based on different criteria. That said, the best location in France depends greatly on your unique situation and lifestyle.
4. How does rental yield in France compare to other European countries?
Rental yields in France generally range from 3.8% to 5.0%, which is relatively moderate compared to some European cities like Dublin (7.33%) or Riga (6.46%). This makes France a stable but less lucrative option for high-yield-seeking property investors.
