Oct. 27, 2009
Paris, France
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- "Hey, Mom, Take A Look!"...
- Why Not Costa Rica?...
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Dear Live and Invest Overseas Reader,
When we decided we wanted to celebrate the holidays in Paris last December, we had to seek out (and pay for) a short-term rental apartment, for our own apartment in the City of Light was occupied. We'd rented it long term to a nice Japanese banker and his wife when we'd relocated from Paris to Panama City six months before.
That's the downside to long-term rentals from the owner's point of view. You give up any opportunity for personal use. The other downside to making your rental available for long-term as opposed to short-term tenants, depending on the market, can be the return. Often, you can net more making your place available for weekly stays, for example, than on an annual contract.
On the other hand, renting out your property short-term means more wear and tear, both for the property and for you. Constant turnover of renters means more breakage (of the dishwasher and the washing machine, for example, because tenants don't know how to operate them...of dishware because someone staying in an apartment for a week isn't going to replace any glasses he breaks, whereas someone living in a place for 12 months or longer has to) and more hassle (bookings and arrivals have to be managed, keys have to be collected, post-rental inventories taken).
Our apartment in Paris, behind the Musee d'Orsay and two blocks back from the river, is part of our long-term plan. When Lief and I are ready to flip the switch to retirement, we'll spend four to six months a year in our little place on the rue de Verneuil. Meantime, last summer, as we prepared for the move to Panama, I couldn't bear the thought of a steady stream of strangers coming and going in our 300-year-old Paris home.
Lief, on the other hand, couldn't reconcile himself with the idea of leaving the place sit vacant while we're down here in the Hub of the Americas trying to build our businesses. Long-term tenants was our compromise.
Mr. Yakamoto and his wife were ideal. According to our property manager, who checked in on the apartment at least once a month, the couple kept things spotless and treated the place like it was their own.
Alas, Mr. Yakamoto's bank has called him back to Japan. He and his wife departed Paris and our apartment last month, and Lief and I again faced the question: long term or short? Should we seek another long-term tenant...or try our luck with the short-term market?
We've decided to seek short-term (weekly) renters.
First, because, while the long-term rental market in this city has softened considerably over the past 18 months, the short-term market remains strong. Our rental management group believes they can earn us more from two weeks short-term rental monthly than we were earning per month from the previous annual contract. Hard to argue with those figures (especially if you're a closet accountant like my husband).
Second, because, if we can make more renting the apartment two weeks per month on average than we were making renting it full-time, that leaves two weeks per month not spoken for. That's two weeks per month when we could use the place ourselves or make it available to friends passing through the city. Already, I've begun thinking about when I might be able to work a quick trip to the French capital into my schedule.
Also, frankly, our apartment is better suited for short-term than long-term tenants. It's what you might describe as very fully furnished. One of my favorite pastimes in Paris is shopping, and our
pied-a-terre on the rue de Verneuil harbors the fruits of this hobby--shelves full of books, cabinets full of specialty cookware, trunks full of keepsakes, and surfaces covered with souvenirs and antique collectibles.
A couple or family moving into a place for a year or longer wants to make it as much like home as possible--their home, not the owner's. In our Paris apartment, this is a challenge. The Yakamotos didn't seem to mind, but other would-be long-term renters likely would.
Holiday-makers, on the other hand, in the city for a week or two, would delight in the well-appointed surroundings. The place offers any comfort or accoutrement any short-term tenant could look for.
Except a television in the living room. We have one in the master bedroom, but I resisted the children's pleas for a second one in the salon. There's no arguing with our rental manager, though, who assures me that, for the short-term market, we've got to have a TV in the main living area. Lief is ordering one online from Darty as I write. He'll arrange for our property manager to meet the deliveryman at the apartment next week.
Kathleen Peddicord
P.S. This current rental experience in Paris is one of our most successful (that is, good yield, minimum hassle) to date, thanks to our property and rental managers. As I've explained before,
your rental/property manager is the key to success in this business.
P.P.S. Just in case you're planning a visit to Paris:
parisattitude.com
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"Mom,
take a look," wrote my daughter Kaitlin yesterday. "This is the press release I put together for the artist exhibit I'm helping to organize as part of my internship."
Kaitlin is studying art history at Marymount Manhattan College. If you'll be in the Big Apple between Nov. 2 and Dec. 1, stop by the college's Hewitt Art Gallery to see the show, which, as Kaitlin explains, "juxtaposes and likens the fall of the Berlin Wall (on 9 November 1989) with the destruction of the World Trade Center (on 11 September 2001)." The 9/11-11/9: Berlin/New York event marks the 20th anniversary of the dismantling of the stone wall that once separated East from West Berlin.
"Kathleen, I enjoy reading your articles on where to retire. But I must ask why you are so against retiring in Costa Rica? There are beautiful places to retire there. Do you consider only the cheapest places to live and retire? What about those of us that have plenty of money in our 401(k)s and other retirement accounts and for whom money is not a concern. In that case, would you still not recommend Costa Rica? I would like your thoughts."
-- Rob Y., United States
Often, I'm accused of the reverse by readers writing to ask if I'd please pay more attention to the top options for retirees on limited budgets.
That is, no, cost of living isn't the only criteria I consider, but let's start there.
If budget is your primary concern in planning for your retirement to another country, I recommend you look closely at Ecuador. It's the cheapest place to retire in the Americas.
Cheapest, but not best. That'd be Panama. Life in Ecuador is more limited, more frustrating, more Third World.
On the other hand, in Ecuador, the cost of living can't be beat, the weather can be ideal, parts of the country are beautiful, and living in Ecuador would be an adventure.
If, though, budget is not a concern, and you're shopping simply for the best place to spend your retirement years, then I'd look beyond Ecuador. Beyond Ecuador, but not to Costa Rica.
Costa Rica no longer makes sense as a super-affordable retirement haven, because the costs of living and of real estate have increased significantly over the past 10 years. Neither does it make sense as a top-choice overseas retirement haven in general. Crime has become a concern for both locals and expats. A friend living in the hills outside San Jose has had his home broken into three times in the past 18 months.
Plus, I've gotten the feeling during my most recent visits that the Ticos just don't want anymore gringo retirees living among them. Come, visit, spend your dollars, they seem to say without saying it, then go home.
Furthermore, despite all the hype and hoopla surrounding Costa Rica as a retirement haven, the infrastructure is lacking, and the country has abandoned most of the benefits of its formerly famed
pensionado program for foreign retirees.
Perhaps, though, Costa Rica appeals to you for some reason you can't articulate. You just like it there, or it just feels right to you. I respect those as solid reasons for choosing one country over another, and, if that's the case...if you just feel at home in Costa Rica...then, by all means, keep it on your list. But, before you commit, spend an extended period in the country, so you have more of a living-there experience rather than simply a vacation experience of the place before relocating full-time.
Also before committing, consider alternatives. If an ultra-low cost of living isn't your priority, you have many good ones. In the Americas, look at
Panama (the only advantage of Costa Rica over Panama is the weather around San Jose, but, if you don't mind living outside the capital, you can find pleasant even cool climes in Panama, too);
Uruguay (down at the bottom of the world and hardly a travel hub but boasting a sophisticated, European way of life and easy residency); and
Argentina (more sophisticated, more European, and more accessible).
In Europe, look at
France (which I'd argue offers the best standard of living of any country in the world; Panama can make more sense for the "retiree," but life in France is hard to top, period) and
Croatia (my top pick on the Med).
