As an expat, it is never easy to get a real estate investment project off the ground in France, there is the distance, the time difference, being in a different environment, not really knowing the market very well… All these aspects make the decision to take the plunge harder. But real estate remains one of the best long-term investments for several reasons, especially for an expat. Below, we lay out the reasons why we do not think you should put off investing in a buy-to-let.
Real estate: Where French People Prefer to Invest
Of all the solutions open to French investors, most choose to acquire a buy-to-rent property. That was confirmed by the 2018 Ifop-Cecop survey. A safe and profitable investment, investing in a rental property is more popular than life insurance, shares, “SICAV” mutual funds and “Livret A” savings accounts.
Prepare for Your Return to France or Your Children’s.
Whether you are planning for your retirement or your return to France, one of the main reasons French people invest in France is so their savings work to prepare for their future. That, however, is not the only reason and many expats choose to invest in a studio or one-bedroom apartment because their children will be returning to France at some point.
In both cases, real estate remains an excellent physical investment, there is no doubt about its usefulness for living in or renting out, as opposed to an “SCPI” private investment company, for example, which is a purely financial investment. For an expat, buying a studio apartment is therefore a good way of starting to develop your portfolio or diversifying your assets, whatever your ultimate objective may be.
Take advantage of the historically low interest rates
Over and above the reason that brings you to invest in real estate in France, the most significant aspect of the current situation is that interest rates are at an historically low level.
Even if rates for non-residents or expats are slightly higher than rates offered to French residents (a non-resident represents a higher risk of non-payment as far as banks are concerned), today it is possible to borrow at fixed rates of lower than 1.5% over 20 years. This is, therefore, the ideal time to take out a mortgage. Also, there are banks that are willing to accommodate expats and grant them mortgages for their real estate projects.
Real estate – A Profitable Investment
In their latest study, the Meilleurtaux website compared the yield of 7 different types of investment: real estate, “Livret A” savings accounts, shares, government bonds, “SICAV” money market funds, life insurance and gold. And guess what? For the past 20 years, the best-performing investment has been real estate.
Indeed, real estate investment is minimally volatile with yields that remain high, even at a time when prices are coming down, due to the leverage effect of taking out a mortgage. Rental investment is therefore a sound investment that pays off. We would go so far as to say that it would be a shame not to take advantage while you are an expat because you can buy a studio or one-bedroom apartment today in Paris, Lyon or Bordeaux with a deposit of only 20% of the purchase price of the property, or even 10% under certain conditions.
If you are an expat, this is the perfect time to get a real estate project underway or to re-examine a real estate project you may have put to one side, especially in view of our solutions for organising everything on your behalf without you even having to travel back to France.