Finding a place to hang your hat in Paris
The first time you landed at Charles de Gaulle, it’s likely you taxied to a quaint little hotel on the Left Bank, spent the week visiting museums, shopping at the “grands magasins,” dining at the most written-about restaurants and getting to know the lay of the River Seine.
It doesn’t take long for “la maladie” to set in (a love affair with Paris), and before you know it, you’re landing at CDG time and again, but instead, taking an airport shuttle to an apartment in the Marais that you booked on the Internet.For stays in Paris of five days or more, a furnished apartment turns a “tourist” into a “visitor.” The moment you press the keys on the “digicode,” enter the stairwell, turn the funny looking French key in the lock and step into your private little world fully furnished, comfortable and lived-in, you are no longer a tourist, nor even a visitor at all – but a real Parisian, even if only for a few days or few weeks.
What you give up by staying in a hotel is often just the concierge service – the hotel personnel who are there to answer your questions, summon a taxi, give you a wake-up call. What you gain is usually space, a kitchen and place to entertain, privacy and most importantly, that feeling that you “belong.”Thanks to the Internet, rental agencies have blossomed from just a few to dozens. Run by a variety of different sorts of enterprises or individuals, they offer every sort of rental possibility and operate in many different ways.
Your experience renting an apartment could depend mostly on the quality of the management along with the quality of the apartment itself. Prices vary greatly and in most cases, the old saying is true – you get what you pay for.How do you discern and choose an apartment or an agency? If I didn’t know better, I’d be confused, with so much choice and with so much hidden to the average vacation apartment renter. Large agencies, which have been in business a long time give you the benefit of stable management, but if they represent too many apartments, the quality of what they offer can be diluted by those on the lower scale. Also, they may not pay as much attention to the detail of each client if they’re juggling too many clients/rentals at once.
Some agencies aren’t agencies at all. They are marketing vehicles for individual owners who need a way to advertise their properties. Consequently, they offer little if no service, but often they rent at a lower price, for good reason.
More and more “boutique” agencies have opened, representing a handful or two of select apartments. These agencies will specialize in a particular area or type of apartment – by size or luxury. You may pay more to rent from a boutique agency, but you are likely to get more than you bargained for, too.
There are also individuals who rent their apartments without representation by an agency. They advertise for themselves on the Internet or in magazines and can afford to charge less because they are not paying agency fees. However, keep in mind that they may not be able to provide the same kind of service, either.
The person who has successfully rented a pied-à-terre doesn’t usually go for long without getting the bug to own one himself. They decide that it would be just delightful to spend a few weeks a year in Paris and wouldn’t it make sense to make an investment by owning the apartment, using it when they like and renting it the rest of the year?
Yes, owning property in Paris is, without any doubt on my part, a good investment. Statistics recently published by the Chambre des Notaires de Paris report property prices on the average in the city up 14.2% from 2003 to 2004. This rising trend of about the same level has been recorded since 1998 and there seems to be no end in sight. Experts say the trend will continue as long as interest rates remain low (under 3%) and lending terms remain long; there is continual revival, renovation and reconstruction of existing properties; and sellers continue to price their properties properly to sell quickly.
If your purchasing power is in US or Canadian dollars, even with today’s unbalanced rate of exchange ($1 = .75E at the time of writing), there is justification for investing in Paris property. Lenders will mortgage up to 80% of the price of the property, leaving you with a cash burden of 20% for a down payment and about 7% for closing costs (taxes and Notaire fees). This 27% is the only sum, which is directly affected by the rate of exchange and with a currency broker, you can negotiate the best rate.
Interest-only and long-term mortgages available on the market today help hedge the bet against a poor rate of exchange. If you plan your finances well, you can minimize the expense and maximize the benefits.
Breaking even or earning a few extra centimes on renting your Paris pied-à-terre makes it doubly financially sound, while satisfying the emotional urge to call it your home in Paris. In fact, if you buy right, equip it right and rent right, you can earn as much as 10% a year owning a vacation rental in Paris, which has very little non-season to speak of (January and August are the two lowest periods).
Buying right means purchasing a property that has high rental potential at a low enough price to afford a good return. High rental potential depends on location, size, accommodation, features and amenities. Equipping it right means providing the furnishings a renter expects – good quality linen and mattresses, fully equipped kitchen, washer and dryer, comfortable furniture and tasteful decor. The more luxurious the apartment, the higher the rent you can achieve.
Renting it right means maintaining a high occupancy rate. Agencies with a large clientele and a substantial presence in the marketplace can keep an apartment rented at least 60% of the year and often much more. Agencies charge for their service, from as low as 10% of the gross rental to as much as 40%, depending on the level and quality of service they dispense – but the higher the occupancy rate, the better your rate of return, and that usually comes at a price.
Those who are very familiar with the vacation rental market can advise on what part of Paris and what kinds of apartments have the highest occupancy at the best rates. Then, finding the right property is key to a successful investment. This is where having professional assistance can cost you a bit on the front end, but earn you “beaucoup de” bucks on the back end.
Americans are “spoiled” by a system called the “Multiple Listing Service” (MLS), which enables all properties on the market to enter a pool accessible by all real estate agents. Agents are willing to share commissions, therefore one agent can represent a buyer and have access to all properties.
This isn’t true in France. There are thousands of agencies in Paris alone, few of which are willing to network with the others much less share commissions. Each represents its own small pool of properties, normally in one particular area of the city. Because of this, agents are working only to satisfy their own pocketbooks and care only about selling the properties they represent to yield a full commission (about 5% built into the selling price). In general terms then, to find a really good property, one must canvas many of the agencies and visit lots of properties while shielding oneself from the agents’ hard-sell tactics. For this reason, property-finding services have sprung up not only for foreign buyers, but also for the savvy French as well.
A good property finding service is well equipped to advise on how best to structure a purchase, vis à vis inheritance and capital gains tax laws that could later cost you or your children lots more than it should. They will also know how to negotiate to reduce the purchase price, agency fees and as a result, the relative taxes. While their fees range between 2% and 5% of the purchase price of a property, their assistance can save an incalculable amount of time and quite a bit of unnecessary expense.
Now that you’ve found and purchased your pied-à-terre, decorated and equipped it, you’ll be in the position of being the landlord and offering your home in Paris to vacationers, just like you were…once. It’s your opportunity now to interview the rental agencies to determine who will represent your apartment, or if you will manage it yourself. This time around, you’ll be viewing them from a different perspective, but don’t forget which ones impressed you when you were the tenant. They will likely be the ones you’ll want representing your apartment.
Adrian Leeds is the editor of “Parler Paris Newsletter,” “French Property Insider” E-zine, and author of the “Leeds Good Value Guide to Paris Restaurants” of the Insider Paris Guides. She is the co-coordinator of the Parler Parlor French-English Conversation group and host of a series of conferences including the Working and Living in France Conference, May 20-22, 2005, here in Paris. Most importantly, she and a team of professionals offer a wide range of French property consultation services.