Investing to prepare for retirement, strengthen one’s wealth, or prepare for a return with a pied-à-terre: the reasons for investing are numerous. France is a favored choice for many expatriates. The French market is a safe bet: robust and growing, it offers secure borrowing conditions compared to other countries.
The barrier of distance remains an obstacle, but it is not insurmountable. Not being on-site can be intimidating. However, investing in a quality property, in line with your specifications, and ensuring its effective rental is possible when you are well accompanied. Finding trustworthy partners at each stage of your investment project is key.
Who are these partners, the driving force behind your project? What is their added value for your investment? PATRIMOLINK explains it all!
Defining your project and your wealth strategy
Whether remotely or not, asking the right questions to formalize your project is crucial. You may want to invest but not be sure how to do it and what products are available. From a downtown studio for rental use to a T3 in bare ownership, there is a wide variety of properties, locations, and, obviously, budgets.
To avoid wasting time and potentially money, it is important to take the time to define the ins and outs of your investment:
– Who is investing? Will you invest alone or with someone else? Under what legal union/matrimonial regime?
– What is your budget? Can you buy “cash” or will you need a bank loan?
– When do you want to proceed? Immediately or do you need to wait for a particular condition?
– Why are you investing? Do you want to prepare for retirement, a return, or grow your wealth?
All these questions will help you refine your investment strategy and identify personal priorities, to move on to the next step: confronting them with the reality of the market.
All investors are looking for the perfect property: an affordable property without renovations in a central location, well-served by transportation, close to amenities and employment areas, for maximum profitability. The perfect property may not exist, but very good ones with four legs can be found, provided you have a good understanding of the market.
The ideal is to find personalized and specialized support that understands the specificities of your investment project from abroad, validates its budget, and can advise and guide you on its feasibility.
Another important point not to be overlooked is the integration of this new acquisition into your wealth. Whether you are a first-time investor or a repeat real estate investor, optimizing your tax, succession, or other aspects is essential.
French taxes have a bad reputation. They are often considered by expatriates (especially those living in low-tax countries) as too numerous and high. However, they offer many possibilities for exemptions in practice. Knowing them well allows you to exploit all the possibilities to, as far as possible, eliminate taxes.
PATRIMOLINK offers specialized support, entirely digitized. From the first contact to the signing of the agreement, we follow you every step of the way in realizing your project, wherever you are. We are remunerated through a commission paid by the seller, transparent to the buyer.
Finding your property
Once your strategy is defined, the search for the property can begin. With a clear specification, it will be more efficient and faster. It is most often carried out by a property hunter. They specialize in finding properties on behalf of an individual or a professional. Their in-depth knowledge of the local market and their extensive network of partners allow them to find the property that meets their client’s expectations, or even conduct a first visit.
This professional will be able to inform you about the most sought-after neighborhoods, but also those undergoing restructuring and which could increase in value over time. They can also offer alternatives if your specifications prove too difficult to meet.
In any case, they will allow you to compare several options to make an informed choice.
Bank brokerage, a winning choice
Once the property is found, the question of financing arises. While some investors can do without a bank to invest, a mortgage remains a necessary step for all others.
The lending context has recently tightened in France. However, taking out a mortgage as an expatriate is still entirely possible, if you are well accompanied.
Since January 2022, the restrictions of the High Council of Financial Stability have become legally binding for banks. This means that a bank cannot lend to an individual indebted to more than 35% of their resources (net income before tax), over a period longer than 25 years. The HCSF allows a 30% derogation from these criteria.
To these rules have been added an increase in inflation. An indirect consequence of the Covid pandemic, it is being combated by Central Banks with interest rate hikes. Banks have no choice but to increase their rates, making borrowing increasingly expensive. It even becomes difficult to obtain for some borrowers due to the usury rate.
The usury rate is the maximum rate at which a bank can lend. It is set every month by the Banque de France to follow price developments. Even reassessed every four weeks, it quickly becomes a ceiling reached for the least favored applications.
Another consequence of inflation is that loans are becoming a less and less profitable product for banks, which are more reluctant to grant them. Therefore, it is necessary to be willing to discuss with your bank and to be flexible. One or more collaterals (insurance, credit card, repatriation of funds, etc.) can open the door to better conditions, in some cases those of the loan itself.
It has become essential to find an appropriate partner during your search. Working with a broker specializing in non-resident files puts all the odds in your favor to see your request succeed. Thanks to their network and long-term relationships with numerous establishments, they will be able to identify the best partner to submit your request to. They will prevent you, for example, from wasting time waiting for a response from a bank that no longer processes expatriate requests due to a recent change in internal policy.
Notarial formalities
Popular wisdom says: “For the deeds of a good notary, never regret a salary,” and this is often confirmed in practice. While securing your transactions legally (authentication and preservation of deeds, a public authority mission), a notary is also a source of valuable advice and recommendations for better investing.
As a specialist in private law, they are aware of civil, tax, and legal developments that they must anticipate for you. They are also well-informed about matrimonial regimes, which condition your rights and obligations towards your spouse in the event of investment as a couple. Choosing the right notary means avoiding future (costly) surprises.
Could you please summarize all this in a word or two?
Source : Douligne
Since the lockdowns, secure platforms have been put in place. It is now possible to complete all procedures from abroad, without traveling. Once again, it is essential to choose a partner familiar with the situation of expatriates. This situation has specificities that a family notary, undoubtedly very competent nationally, cannot be aware of.
Managing your property
he cornerstone of the success of your investment, management must not be neglected. If you are a non-resident, it is a trusted third party who will have to take care of it for you. Between finding tenants, supervising entries and exits, daily minor repairs, or major unforeseen work (water damage), a presence on-site is essential.
Some investors entrust this management to a relative. However, this person needs to have time and some experience in rental management. Otherwise, finding a manager is preferable.
The manager takes care of all the steps to ensure optimal rental. They:
Handle the advertising of your property
– Select tenants for you
– Complete all administrative procedures (lease drafting, APL form, etc.)
– Perform entry and exit inventories
– Collect rents on your behalf and issue receipts
– Manage any repairs with your consent
It is important to detail the mandate of your provider to understand exactly what they are required to do. Some agencies, for example, do not include tenant search, which is charged separately. Taking your geographical situation into account is also important. The manager must be able to assist you quickly and effectively in case of problems (disaster, unpaid rent, etc.).
Entrusting your property to an agency represents a cost that can affect your profitability. However, it is a necessary step to rent your property serenely and fully benefit from the fruits of your investment.
The legal and accounting monitoring of your investment
Tax and accounting legislation is becoming increasingly complex. It is not uncommon for a new finance law to amend what the previous one had established. Application decrees are often awaited. In short, it can be reassuring to rely on a specialist to be sure not to miss any obligations.
An accountant ensures the accounting and administrative monitoring of your investment. They prepare the main accounting documents, particularly those requested by the tax authorities. They can concretely assist in setting up a furnished activity, or the constitution of an SCI (Civil Real Estate Company) (drafting of articles of association, choice of tax regime), and the keeping of its accounts.
They also provide advice on wealth structuring and tax optimization issues. For example, they can prepare tax and profitability simulations to guide investment decisions.
As a tax law professional, a tax lawyer can alternatively intervene more punctually. For multi-investors, they offer specialized advice on tax matters to optimize the taxation of a heritage, while remaining within the framework of legality.
Once again, we cannot emphasize enough the importance of choosing a provider familiar with the situation of non-resident taxpayers. Mastery of the international context, and in particular of the various tax treaties, is essential to provide relevant advice.
Renovation and furnishing of your property
A common practice among seasoned real estate investors is to buy a property with renovations to obtain interesting prices. The downside to this discount is, of course, the realization of renovation work, sometimes significant, to bring the accommodation back to standard and up to date.
Unless you have someone on the spot, managing these works from a distance can be a real headache. However, all investors who have undertaken renovations know that a poorly orchestrated site means delays, defects, and additional costs.
There are providers that allow you to acquire this type of real estate and carry out work on it in your absence. These professionals most often hunt for housing for you, and carry out major renovations (renovation of common areas, facade renovation, external insulation, modification of the overall plan, etc.). These properties are thus renovated, compliant with the latest construction standards. This service entails an additional cost for the buyer, but it guarantees being able to rent the property serenely, in the long term, without fearing the schedule of prohibition of the latest Climate Law.
Renting furnished can be very advantageous from a tax perspective, but furnishing a property from abroad can be tedious. Between deliveries (more or less on time), assembly (complex), and installation of furniture, it is often time-consuming and restrictive.
Moreover, it is necessary to be well informed about the list of mandatory furniture to qualify your property as furnished. A single missing element leads to requalification. It is also necessary to be aware of the trends that appeal to a wide audience, in order not to make mistakes and meet as many needs as possible. Finally, it is important to find the right balance between reasonably priced furnishings and sufficient quality to comfortably accommodate a tenant in the long term.
The simplest solution is to use a specialized organization and a turnkey solution. Their packages include the mandatory furniture, basic appliances, and the minimum decoration that makes a property welcoming and attractive. There are now all-in-one solutions, offering to choose from a catalog of furnishing packages according to the desired atmosphere or the target audience.
Investing from abroad is not impossible, quite the contrary. There are therefore many actors to help you realize your project. Well chosen, well briefed, they will be your best allies in building a solid and profitable heritage.
PATRIMOLINK accompanies you throughout your investment, from the development of your strategy to its management.
Content grouped for informational purposes only and does not replace current regulations. Without consultation with our experts, PATRIMOLINK cannot be held responsible for any consequences of implementing the advice and information provided in this article.
