I Have a Budget of €300,000, What Should I Invest in?

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Low interest rates at the moment mean gains in real estate purchase power for investors. With a budget of €300,000, you can put together a solid and profitable long-term investment project. Discover the property investments that are possible with a budget of €300,000.

Your Financial Situation

You can afford to put down a deposit of €300,000

You could become a property owner in no time. And even envisage investing in a property with a purchase price higher than that amount. With a deposit of €300,000, bankers will welcome you with open arms, eager to offer you very advantageous borrowing rates.

You have a borrowing capacity of €300,000

At the time of writing in late summer 2018, as an expat you could borrow over 25 years with a minimum rate of 1.25% (source: Carte Financement). A slightly lower rate than the previous year. More power to your budget! The average cost of borrowing €300,000 is €100,000… i.e. €50,000 less than in 2014!

To be sure you are financially stable, banks may require a deposit of between 10% and 20% of the sum borrowed. Here, that would be between €30,000 and €60,000. It is, however, not unheard of for a bank to request 30% from a borrower who is not a French resident, to cover all expenses.

With average monthly repayments of 1,000 euros per month, there is every chance your bank will grant your mortgage request if that amount does not exceed 33% of your household income (net of fixed charges).

What should I buy?

In Paris, the high-price capital, the price per square meter varies between 6,000 and 14,000 euros. With a budget of 300,000 euros, you can acquire a one-bedroom apartment with a floor area of around 40 sqm. In the more expensive neighbourhoods (which are also the most sought-after), set your sights on a nice studio apartment with a floor area of around 20 sqm.

You may be interested in reading this article: The Top Five Advantages of a Customised Property Search

Elsewhere in France, you can “push the walls out” a bit. In Lyon, for example, you can opt for a 60 sqm. apartment in the city centre, with a terrace to boot! With a similar price per square metre to Bordeaux (apart from the very centre of the city), you can target similar property types.

What can I hope to get out of it?

It is difficult to come up with an exact figure for the yield on your investment. Smaller apartments are known for offering the best yield, but there is a higher turnover of tenants and you will have to carry out repairs and home maintenance more frequently. Investing in a sought-after residential neighbourhood will give a lower yield because the property prices are higher to begin with. But there are fewer chances of your property remaining empty.

Compared to life insurance with average yields of between 1.5% and 1.8%, rental investment easily brings better results. In 2018, average yield in Lyon is 5.16%, in Bordeaux 5.19% and in Paris 3.42% (source: Immoprix). The figures can be higher if you pay sufficient attention to two criteria: the quality of the property and its location. An apartment close to public transport, reputable schools and/or shops will be more highly-sought after. You can also stake your investment on the appeal of up and coming neighbourhoods.

Your buy-to-rent investment will only be a complete success if it is in line with your personal expectations. Give due consideration to defining your objectives before you take the jump: is the apartment for your children, a retirement home, an investment to sell on for capital gains? You will then be in the best position to build up a long-lasting asset-base.