Investing in stone is a favorite investment for the French, ahead of the stock market and life insurance. Moreover, investing in rental property in Paris is a highly secure investment. The capital is very popular with tenants and investors. Indeed, the Parisian market is very dynamic: it is a tense market.
In May 2021, we observed that the number of buyers was 10% higher than the number of properties for sale in the Paris real estate market. Two types of rentals show market tension: long-term rental and seasonal rental (short term). Before the health crisis going on, a rental property advertisement received three requests per day. So how to organize your real estate project while away? What are the different steps for a successful rental investment in Paris?
1. Define your objectives for your rental investment project
Before embarking on a rental investment project, it is essential to identify your objectives. This way, the purchaser will better understand his project and channel his research.
Ask yourself the right questions to identify and set the remote real estate investment objectives. For example, why do you want to make this real estate investment? Is it to generate additional income or to invest your savings securely?
By thinking about these questions, you will know if it is more strategic to orient your research toward profitability or safety.
2. Budget and financing options for rental investment
Estimating the required budget for investing in rental property in Paris
Once the objectives related to real estate investment are clear, it is time to evaluate your investment budget. The budget may vary depending on the goals. For example, suppose we are looking for profitability in the context of a rental investment in Paris. In that case, the budget will differ whether the buyer is looking for a patrimonial investment in a sought-after Paris area.
It will take a minimum of 220,000 euros for an intramural rental property project. And between €180,000 and € 200,000 to invest in the Paris outskirts.
Then it is necessary to take into account the many costs linked to a real estate acquisition. In addition to the property's purchase price, it is essential to consider the agency fee, notary's fee, and refurbishment if necessary.
Financing options and strategies for expat investors in Paris
Next comes funding! Here, it means calculating one's borrowing capacity. The latter will determine how much a household can devote to repaying a loan while maintaining a comfortable life. The borrowing capacity cannot exceed 33% of a household's income. Calculate this rate by multiplying your income minus charges by 33 and then divide the result by 100.
Contrary to popular belief, an expatriate can borrow in France. Some banks, such as Crédit Mutuel or Société Générale, indeed refuse to lend to non-residents. However, it is possible with Crédit Agricole or Caisse d'Épargne, for example. When an expatriate decides to invest in real estate, having a contribution representing 20 or 30% of the property's price is essential for obtaining credit. The bank may require a guarantee on the property, such as a conventional mortgage.
3. Choosing the right location and type of property for your investment in Paris
When an investor seeks to buy a property in Paris to generate profitability, some districts or neighborhoods are more interesting than others. In other words, the property's location may offer a more attractive price per m2 to maximize the profitability of the investment. Yet, properties on the outskirts of Paris, such as Levallois-Perret, Clichy, or Pantin, are places where the price per square meter is more affordable and where the rents remain similar to those in Paris.
Note that the prices per square meter in downtown Paris fluctuate between € 10,000 (20th) and € 16,000 (6th).
But, if you invest in Parisian real estate to secure your assets, it is more interesting to invest in Paris central area. In this case, small surfaces like studios or shared apartments can also be very profitable. First, these surfaces are more in demand, but also the rent per m2 is higher.
4. Choosing the best partner for your Real Estate investment in Paris
For expatriates, distance can be a barrier to purchasing real estate in France. But investing from a distance can be done by finding a trustworthy person or a professional entity like "My expat.”
The interlocutor must know how to analyze and react quickly to the Parisian Real Estate market. Whether relative or professional, the chosen entity will carry out all procedures on your behalf with your power of attorney, such as visits and meetings with the notary.
5. Long-term investment vision and quality criteria
When embarking on a rental investment, we must not forget that it is a long-term investment. Consider this principle when identifying objectives, calculating profitability, and borrowing.
For a successful investment, always reflect on the potential capital gain that property could generate in the event of a resale. Moreover, is it a quality property in terms of location, size, and characteristics it offers? Will it be easy to resell? Even for renting a property, quality plays a fundamental role. The accommodation must be well located and have the requested criteria for limiting rental vacancies and slowing tenant turnover.
Credits photo@Juan Ordonez
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