My Third Investment Property: A Small Studio in the South of France

At the beginning of 2021, I started seriously searching online for another investment property… this time, in France.

I knew almost nothing about investing in France, but one thing I did know was that homes were more affordable there than in California. Even though Paris is somewhat pricey, the rest of the country is not. For example, in Palo Alto, CA, you cannot buy a livable single-family home for less than $2M. For that same price in the Loire Valley, FR, you can buy a castle with 20+ bedrooms!

"In Palo Alto, CA, you cannot buy a livable single-family home for less than $2M."

As the weeks and months passed, I researched more and more Parisian properties and suburbs. After endless hours of searching, I came to the sad realization that I could not afford a place in Paris with a view of the Eiffel Tower - that is, unless I wanted a <100-square-foot shoebox with a community-style bathroom. So I decided to refocus my search on the French Riviera. After all, if I couldn’t afford a view of the Eiffel Tower, I may as well try to go for a view of the Mediterranean Sea ;)

Surprisingly, there were quite a few properties for sale for less than €300,000 in and around Nice. However, not many of them had a view of the sea. In fact, there was only ONE property that I came across online all year that was in my budget and had a balcony with a water view. It sold in less than a week for €295,000 to another buyer.

At the time when that home was on the market, I didn’t have the money to buy it anyway. But that experience showed me proof that what I was looking for did exist. And I knew that when I had the money, I would find a property.

When I finally visited France for the first time in the Fall of 2021, it was love at first sight. Not only did I fall in love with France, but I also reunited with my French boyfriend after what felt like an eternity. Due to the pandemic, we hadn’t seen each other for well over a year, so I was thrilled to spend ten whole days alone with him. We spent our first 5 days together in Paris, and then our second 5 days were spent in the French Riviera.

"Not only did I fall in love with France, but I also reunited with my French boyfriend"

While we were in Paris, we didn’t look at any properties. The local real estate agents had confirmed my earlier thought that I could not afford Paris (especially anything decent with an Eiffel Tower view), so we didn’t waste our time house hunting there since it was out of my budget. But when we got to Nice, it was a different story. I was determined to leave with a property.

Frenchie and I walked into a few different brokerages when we got to Nice, but the first 2-3 agents snubbed us because they didn’t speak English and I didn’t speak enough French. But when I came across an office in Nice with a familiar Century 21 sign, I had a feeling we would find an English-speaking agent. We walked in and I asked if there were any agents there who spoke English. All of the people in the office pointed to the same guy, the one in the big, glass office.

We ended up having a meeting with him on the spot, and I told him my search criteria: sea view, balcony, good location (near the train and beach), and under €300,000. I also told him that it needed to be Airbnb-able, since I planned to rent it out most of the year. He informed me that Nice has rental restrictions and it is prohibited to rent your home out as a short-term rental for more than 4 months out of the year. I didn’t see that information posted anywhere online when I was doing my research, but I also didn’t look into the local laws as well as I could have.

After we talked about my search criteria, the agent pulled up 3 listings on his computer. He turned the screen around to show me and my boyfriend, and I quickly looked through the listings and said, “No, no, yes.” I asked him to set up a showing for the “yes” property within the next 48 hours since we were nearing the end of our trip, and he lined up an appointment for us at the property the next day.

My boyfriend and I quickly toured the tiny studio apartment in a town that neither of us had ever been to before, Villefranche-sur-mer. I had never even heard of it, to be honest. But he had. And even though he didn’t know much about the location, he knew that it was an attractive spot. My realtor assured us that it was an A location, and he was right. It was close to the shops, restaurants, train and beach. And of course, there was a small balcony with a view of the Mediterranean. It was perfect.

"My realtor assured us that it was an A location & he was right"

I pulled my boyfriend aside to ask him what he thought. Knowing that he has the analytical brain of an engineer, I expected the response that he gave. He suggested looking at other properties before making a decision. While that was sound advice (especially considering this was the only property we saw), I ignored it. We didn’t have any time left on our trip to look at other properties, and this one ticked all of the boxes. The only thing it didn’t have was parking, but that is probably one of the reasons it was in my budget.

It had been on the market for a few months and was originally listed for €299,000. Since it didn’t sell after a while, the sellers reduced the price to €275,000. But it still didn’t sell, so I decided to submit a low-ball offer. As a realtor in the US, I usually encourage my clients to submit their offers in writing. But in France, the negotiations start out verbally. So I verbally offered €232,000 and the sellers came down to €248,000. I tried my luck to see if I could get the price down any further and I countered at €235,000, but the sellers didn’t budge. Since I wanted the property so badly, I agreed to their €248,000.

A few days after we verbally agreed on the price, my agent drafted the contract for the sale, aka the Promesse de Vente. It was a 39-page contract, all in French! I had no idea what it said, but I didn’t care. All I needed to know was whe re to sign. Luckily, I had a French realtor friend who had also recently bought a property in France, so she helped me translate and understand the contract.

After getting into contract, I started working on getting a loan from a local French bank. It was interesting to see that they negotiate the real estate contract before the buyer is even qualified for the loan to purchase the property. In California, all of my clients are vetted by a lender and pre-approved for a loan before we even start their home search. This pre-approval helps them figure out upfront what they can and can’t afford. We never go house hunting without a pre-approval letter.

When I got into contract on the France property, I had no idea if I would be able to get financing or not. I just prayed that I'd be able to. Fortunately, they don’t have any credit rating systems in France, so my low 660 credit score didn’t impact my interest rate or ability to qualify for the loan at all. The main things they cared about were my net income and my outstanding debt (excluding credit cards).

"They don’t have any credit rating systems in France, so my low 660 credit score didn’t impact my interest rate or ability to qualify for the loan."

It had taken a little over 6 months, but I finally got my loan approved and closed on the property! I ended up having to put 30% down (not 50%, phew), and I got a 20-year mortgage at a fixed rate of 1.45%. It was like they were giving the money away for free at that rate! Even when we were experiencing historically low rates in the US under 3%, they were nowhere near that good.

When it came time to close, I had to go to the French Consulate in SF and grant power of attorney to the notary in France to sign the closing papers for me. Considering I had never met this person before in my entire life, giving them power of attorney to sign on my behalf was a little uncomfortable. But, thankfully, it all worked out :)