What are the basic steps to buying property in France?

Posted by admin in Property Investment, Property Letters, The Companies, The South of France | September 12th 2005

Before you begin looking for the property you want to own, establish whether you have enough capital for the deposit, are able to raise the finance, pay the arrangement, transaction and legal fees and afford the monthly payment which should include the mortgage payments, life assurance and building insurance. Why is property good?

Here are a few thoughts:

You don’t need much of the purchase price in cash to buy the property you want. (Leverage)

You can buy property worth far more than you are paying for.(Leverage again – using the bank’s money)

You can often increase the value of the property you buy significantly without spending much on it.(Forced appreciation by way of simple improvements)

You don’t have to sell the property to reap the benefits of your growth.(Remortgaging or refinancing – further leverage)

You don’t have to monitor your properties closely from day to day because the market is not volatile.(As the stock market is)

Property prices tend to increase smoothly and consistently.(Natural appreciation)

Property has exceptional and privileged tax advantages.

Fluctuations of any one property’s value relative to the average for any area are very slight. (20 square metres in Adderley Street is likely to be priced similarly to any other 20 square metres in Adderley Street)

It is not difficult to locate a geographical area or region or city where you are going to do better than the national average.

It is a relatively simple, reliable and consistent investment, with great cash and wealth building potential. (From rentals and capital appreciation respectively)

How much do you need to start investing?

Some people choose to buy the apartments outright, some to seek finance, and some share an apartment with friends or family members. A typical investment in a studio with a 70% mortgage however looks like this: Cost of apartment – 150 000€ (always includes agent’s fee)

Deposit (30%) 45 000€
Transfer Duty (+/_ 6.5%) 9 750€
Consultancy (2.5%) 3 750€
Some renovations (not always required) 7 000€
Furnishing (not always required) 5 000€
Total investment 70 500€

The investment may be less if you can qualify for a higher mortgage
Where more significant refurbishments are undertaken, as has been the case in a number of properties that we have bought, the bank will finance part of those improvements, at the same rate as the apartment, being 3.1% p.a., if needed

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