Renovating and Decorating from Profit: Spend Money to Make Money

French Property Insider
Volume IX, Issue 36
September 15, 2011
Paris, France
FrenchPropertyInsider.com

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France: The Owner’s Manual

France always makes sense! It is one of the most beautiful countries in the world, immersed in culture and tradition, with a good climate and unspoiled countryside, as well as excellent health care and affordable real estate. It’s not surprising that France is the world’s favorite destination, receiving in excess of 82 million overseas visitors each year.

This edition is updated and edited by Adrian Leeds and Schuyler Hoffman. If you’ve ever aspired to living or investing in this beautiful and desirable country, France: The Owner’s Manual will provide you with all the information you need to turn your dreams into reality. Get Your Copy Today!

Bonjour French Property Insider Subscriber,

Over lunch today at Café Charlot with Mosaïste, Véronique Husson, we compared the two cafés, one across the street from the other (the other being Café du Marché), and why the one which was the most expensive, was also the one doing the most business -- Café Charlot. We decided that the location was better (on the sunny side of the street), the decor was better and without a doubt, the food was better.

The conversation was relevant because it's exactly the same with rental apartments.

In a signing of an "Acte de Vente" (title deed) yesterday, the seller of the 37.5m2 apartment in the upper 3rd arrondissement said he rented the apartment unfurnished for 1,300€ per month. He was surprised when I told him that even though much in the apartment was new (flooring, kitchen cabinetry, etc.) that the buyers will renovate and decorate it completely and luxuriously costing about 2,000€ per square meter.

By comparison, they will achieve the same amount on the average for a week of rental -- four times the revenue he had. Even after agency commissions to book and manage the apartment (about 35%), considering an occupancy rate of 65% (a fully-achievable rate), the net revenue is almost 30,000€ more per year for short-term rental vs long-term rental. Cost of ownership remains the same -- the same annual property taxes, the same utilities charges, etc. This means that in a little over two years, the rental revenues will have covered the cost of renovation and revenues following that period will become 'pure gravy.'

The point is that it simply doesn't pay to be 'penny wise' by making so little an investment that you don't benefit from a property's full potential by skimping in all the wrong places. Just as the old saying goes -- "you have to spend money to make money." What matters most, just like for the two cafés, are: 1. location 2. decor and 3. amenities.

1. Location

We represent almost 25 apartments. Those that are requested the most, regardless of their decor and amenities, are those in particularly good locations. Those in lessor locations cost less, but achieve less, both in rental and occupancy rates. As time passes, they will likely appreciate less, too. Our advice is that it's better to give up space than a good location if budget is a consideration.

2. Decor

There is a big difference between a professionally decorated apartment and one in which the owner has deposited their discarded furnishings or went the cheap route by installing Ikea-style everything. Someone with exceptionally good taste can often successfully choose inexpensive things that look expensive, but be selective. Spend money on quality goods where it counts, and not where it doesn't count. How can you effectively achieve high rental rates if the apartment isn't well decorated, appointed or equipped?

I have my own personal tricks to balance the renovation budgeting by marrying the two, like mixing zircon jewelry with real diamonds -- can anyone really tell the difference between them? For example, install an Ikea kitchen, but adorn the windows with custom silk drapes. Have the bathroom and kitchen done in artistically designed mosaic tile, but equip the kitchen with inexpensive dinnerware and cutlery. Make the money you spend count toward creating a luxurious look.

3. Amenities

Why allow anything to be missing at all? It costs so little to fully equip an apartment so that a renter will want for nothing and return time and again. Apartments that are not equipped with wireless Internet, free long-distance calling, satellite TV, etc. will be overlooked by most renters. A washer-dryer in an apartment is a major plus and an espresso maker adds even more luxury for very little money.

If you've done it all right, then you will achieve the kind of success most of our apartment owners have had. Just look at this one comment from a renter of "Le Provençal" (Le Provencal), my 16.5m2 studio apartment, as it so succinctly sums it up:

"We had a wonderful time in Le Provençal -- everything was absolutely perfect. We didn't need anything at all. The apartment was very well equipped as well as very functional. [AMENITIES] It's decorated with very good taste, so cozy and cute, the wonderful combination of colors that Adrian used in the apartment cheers you up as soon as you walk in. We definitely felt in our piece of Parisian heaven! [DECOR] The location is amazing, in the middle of Le Marais, next to rue de Bretagne where we enjoyed everyday the picturesque French scenery, with the fresh food shops, fruits and flowers, not to mention all the fabulous fashion shops of Le Marais. It's such a lively neighborhood, we loved it! [LOCATION] We travel very frequently to Paris and have always stayed at hotels but honestly, staying at this cute apartment felt like staying in our own pied-à-terre, very personal and very real. It was way better than staying in a five-star hotel! We'll definitely do this again and again." [REPEAT CUSTOMER]

Irene S., Luxembourg

As it turns out, this renter, who discovered the benefits of a rental apartment, has recently purchased her own pied-à-terre in Paris that is currently under renovation. It will follow the same formula: 1. the location is in the heart of Le Marais a stone's throw from the Saint-Paul Métro with beautiful views and lots of light, 2. Interior Architect, Martine di Mattéo, is decorating it with a very special fun and colorful theme and 3. it will be equipped with absolutely everything, down to the champagne cork.

This is guaranteed success. If you spend money (correctly), you will make money (and take pleasure in end result, too).

A bientôt,

Adrian Leeds

Editor, French Property Insider
Email: fpi@adrianleeds.com

P.S. In 1984, the Minister of Culture created Les Journées Européennes du Patrimoine -- an annual festival that allows the public to discover the richness of their heritage by opening the doors of their buildings, parks and gardens, archeological sites and other aspects of the country's patrimony over an autumn weekend. This coming weekend, September 17th and 18th, marks the 28th edition of the event under the theme of "Le voyage du patrimoine" with more than 15,000 sites open to visitors and more than 22,000 events (conferences, exhibitions, tours, concerts and workshops) in which you can participate. This is your chance to visit some of the monuments and buildings normally closed to the public. Paris.fr is highlighting the Mairie de Paris, one of the city's most beautiful buildings; the Carreau du Temple right here in my neighborhood that is undergoing a major renovation and revitalization and the HÙtel de Lauzun, a luxurious gilded mansion on the Ile Saint-Louis. At the more popular sites, you may find long lines, so plan accordingly! To plan your itinerary for discovering the heritage of Paris and all of France, there are two sites with which you can visit for all the information:

CITY OF PARIS WEBSITE
Paris.fr

OFFICIAL FESTIVAL WEBSITE
Journees du Patrimoine

Free Residential Property Investing Seminar

Tuesday, October 11, 2011 from 4 p.m. to 8 p.m.

Join Adrian Leeds and other property professionals at this free international event for investors wishing to learn more about France’s dynamic property market. Speakers include experienced, independent property investors from France and around the world. Come to network with key players in the property industry and keep up-to-date with changes in the market. The event will run from 4 p.m. to 8 p.m., followed by drinks nearby.

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Auditorium (level -1)
14 rue Bergère, 75009, Paris

For more information and to reserve your spot, contact: justine.trueman@bnpparibas.com

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The luxurious two bedroom fractional ownership apartment known as "Le Palace des Vosges" feels more like a house in the country, but is conveniently located right in the middle of Paris’ most elegant square, the Place des Vosges. If this is the year you plan to purchase your Paris pied-à-terre, Le Palace des Vosges is the perfect property – it is finely decorated by Interior Architect, Martine de Matteo, and furnished with every luxurious amenity. There are just a few shares left. Become one of the happy owners of Le Palace des Vosges before it's too late.

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And to get the free "Paris, France Property Market Report," click here:
frenchproperty.adrianleeds.com

Helpful Conversions for Real Estate

1 square meter = 10.7639104 square feet
1 hectare = 2.4710538 acres
For more conversions, refer to: www.onlineconversion.com/

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