# What is the best way to finance a 2nd home abroad? In France in our case **URL:** \ **Category:** Factual Questions\ **Created:** [April 8, 2022, 5:17pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537 "2022-04-08T17:17:16Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [April 11, 2022, 3:22pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/21 "2022-04-11T15:22:27Z")
I suspect it was used for furniture etc. ---
**Author:** ![Icarus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/icarus/32/72_2.png) [@Icarus](https://boards.straightdope.com/u/Icarus)\ **Post date:** [April 11, 2022, 3:23pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/22 "2022-04-11T15:23:10Z")
If I were your parents I would tell you that you are in no financial position to do this. Your 401k/IRA is not liquid money, and should only be for retirement. So, forget about those amounts in making any calculations. But, I’m not your parents, so instead I’ll just say, “COOL! I hope it works out for you!” ---
**Author:** ![Gozu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gozu/32/6615_2.png) [@Gozu](https://boards.straightdope.com/u/Gozu)\ **Post date:** [April 11, 2022, 3:38pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/23 "2022-04-11T15:38:54Z")
> [@SanVito](#): > > > [@Gozu](#): > > > > So, getting back to the topic at hand, It looks like the ideal way to go will be to contact banks in France and enquire about their requirements, so I will be doing that and seeing how much downpayment is needed, what documents and what interest rates we can expect. > > Something to consider is that the minimum a French mortgage company will lend a non-EU buyer is €250,000 > > Details here: > [Getting a mortgage in France - Wise](https://wise.com/gb/blog/getting-a-mortgage-in-france#:~:text=Following%20the%20Covid%2D19%20pandemic,consider%20lending%20is%20%E2%82%AC250%2C000). > > I’m currently also in the market for a second home in France, but I’ve decided to easiest way to do this is raising a loan with my existing UK mortgage provider against the equity in my UK primary residence. That is very useful information. Thanks Sanvito! - But some lenders **will only grant mortgages for up to 50%** of the purchase price for non-EU nationals.\* - Open a French savings account containing a minimum deposit which covers at least **24 mortgage payments** Just heard back from HSBC and they require a 6-month old bank account as a pre-condition. So that’s good to know. ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [April 11, 2022, 6:20pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/24 "2022-04-11T18:20:24Z")
Good luck with buying an apartment. One thing I would be concerned about is how property owned in another country is titled and how that might affect any estate plans you might have. Not a pleasant subject, but something to consider. ---
**Author:** ![Gozu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gozu/32/6615_2.png) [@Gozu](https://boards.straightdope.com/u/Gozu)\ **Post date:** [April 11, 2022, 9:56pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/25 "2022-04-11T21:56:15Z")
> [@md-2000](#): > > But - you barely have enough for that $200,000 property; a current mortgage for $350K and no savings after purchase seems a little foolhardy to me, as does committing a substantial chunk of ongoing income instead, but I’m financially conservative. You can rent a lot of villa for a lot of months of vacation for that much, without the hassles of mortgage, insurance, property taxes, maintenance, and security for an uninhabited building (What do those figure into your financial calculations?). Plus, the ease of having to change your mind, or being blocked from your property for a few years due to some random issue like a pandemic outbreak. Plus, I assume you’ve looked into the visa requirements to live long term in France (or the EU) if not citizens? Google “Marseille villa rentals…” > > Where are you planning? A city might work well, and be convenient, especially near Paris or some other main hub where you can get back and forth to the USA without a lot of hassle. Plus I have read stories about expats (usually British) who tried to do the _I-want-to-run-a-bed-and-breakfast_ thing in small town France only to find the locals incredibly insular and hostile to outsiders. You can be there 20 years, you’re still an outsider. > > As mentioned, getting a bank account as an American citizen in Europe is an iffy proposition. America, like Eritrea and no other country, taxes citizen who no longer reside in the country. Unlike Eritrea they don’t threaten the rest of the family, just you and your spouse. As I understand, banks may be reluctant to do business with the spouse of an American also. Basically, if in the opinion of the USA they fail the tax reporting and other regulations, they get penalized a massive amount - then get to pay their expensive lawyers to argue whether the fines are justified and _maybe_ get their money back a few years down the road. > [@Icarus](#): > > If I were your parents I would tell you that you are in no financial position to do this. Your 401k/IRA is not liquid money, and should only be for retirement. So, forget about those amounts in making any calculations. > > But, I’m not your parents, so instead I’ll just say, “COOL! I hope it works out for you!” We do have another 200K or so invested in non-retirement index funds we could tap into if we need to. I, perhaps naively, didn’t think it would be necessary to also use that as collateral with the bank because what I mentioned was more than enough in my head ^\_^. But hey that’s what this thread is for. Do american citizen get taxes on oversea property as well as income? I definitely knew about the income, and it’s “only” an issue when you pay less in taxes than you would in the USA. So, it’s an issue in Dubai but it’s not an issue anywhere in Europe (and most of the world, the US has comparatively low taxes). As far as the property, any rental management, short term or long term, would have to go through an agency. We are not going to operate anything as we have lucrative fulltime jobs. > [@Machine\_Elf](#): > > > [@Gozu](#): > > > > As far as collateral. We have maybe 150k in 401ks, 50k in an IRA and 150k in equity in a house worth 500k. > > If you do a cash-out refi on your house in the US, you’ll be assessed a higher interest rate than if you were doing a refi without taking any cash out. You also need to maintain 20% equity to avoid having to pay PMI; since you currently have $150K in equity, that means you’d really only want to take $50K at most out of your house. > > Put that together with your $80K in cash, and you have a $130K downpayment on your apartment in France. > > As for how to finance the remainder of your $200K-$300K purchase price, that’s somewhat of a challenge. You likely won’t be able to find a US-based bank that will offer you a mortgage, since they’ll have a hassle on their hands dealing with a piece of overseas real estate if you default on the loan. > > In the end, you’ll likely have to see if you can get a bank in France to lend you the money, and that may be a problem if you don’t have a permanent address in France. > > Four years ago my wife and I bought some property in Japan, and we had the above problems: couldn’t get a mortgage from a US bank or a Japanese bank. In the end we put up the entire cost via a combination of cash on hand plus a cash-out refi on our first home. As described above, this bumped up the interest rate on our first-home mortgage, but as luck would have it, interest rates crashed in 2020 and we were able to refi again, this time to a rate that was even lower than what we had in the first place. > > Our situation was manageable because we had a lot of equity in our house, and a lot of savings/investments other than the cash we used for the purchase; the property we bought was equivalent to about ten percent of our net worth at the time. Based on your description, your net worth is currently about $430K, so the purchase you’re contemplating is about 47-70% of your net worth. That seems like quite a reach to me; it’s not a purchase I’d be comfortable with. YMMV. Good point about the PMI. Thanks! I had not considered it! As far as purchase goes, you should revise our net worth upward by 200k as mentioned earlier in this post. And absolutely. I loathe risk. I loathe gambling. With few exceptions. But what am I to day? 8% inflation is a lot. [quote=“Pardel-Lux, post:16, topic:962537, full:true”] I concur with everythin @md-2000 has written. And I doubt any French (or European) bank in general will give credit to a US-citizen.[/quote] Well my wife is australian, i’m happy to let her own the apartment in full. > [@](#): > > if I have anything _at all_ to do with the USA, any connection _whatsoever_ 🤨. Should I ever answer yes, they will cut any relationship with me. What the heck? That sounds more like something you would do to a sanctioned country like Russia. Don’t they remember Normandy? Why I never! > [@DavidNRockies](#): > > Even without considering the financing mechanism(s), I have another practical consideration that comes to mind: maintenance and improvement. > > Depending on where/what you’re looking at, places like France have no end of beautiful, charming, multi-hundreds-of-years-old homes that can quickly become money pits. > > And tradespeople (some might say the service industry, generally) don’t necessarily function the way US Americans are used to. > > And then there’s oversight – either on required maintenance or desired improvements. Difficult to do remotely. > > Maybe you could put everything in the hands of a **[property manager](https://www.properstar.com/buying-property/france/property-management),** but even then – do they require X amount of dollars to hold in reserve for maintenance, repairs, and other expenses, and how much does their fee add to your cost of ownership ? > > A brand new condominium in a nice urban area might be an entirely different proposition from something old and charming, but then you may have [**other costs of ownership**](https://adrianleeds.com/subscribe-to-our-publications/french-property-insider/fpi-archives/whats-your-french-property-costing-you-to-own/) to think about. > > _Bonne Chance_ ! You make excellent points. Yes, maintenance costs are a huge factor in picking a property. Yes, new projects can be easier. We are definitely taking that into account though stock for those is tiny, comparatively. Perhaps the best will be something semi-recent. Perhaps built in the past 5 years or so? ps: If extreme right candidate LePen somehow wins the 2nd round, we might reconsider our plans. ---
**Author:** ![N9IWP](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/n9iwp/32/3154_2.png) [@N9IWP](https://boards.straightdope.com/u/N9IWP)\ **Post date:** [April 11, 2022, 11:30pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/26 "2022-04-11T23:30:27Z")
You might find a castle for \< 300k pounds > **[Escape to the Chateau](https://en.wikipedia.org/wiki/Escape_to_the_Chateau)** > > Escape to the Chateau is a Channel 4 reality television series which follows the story of couple Dick Strawbridge and Angel Adoree along with their family as they buy and renovate the 19th-century Château de la Motte-Husson in Martigné-sur-Mayenne, France, while simultaneously raising two young children and starting a business hosting weddings and other events. > The first season follows Dick and Angel's quest to restore the derelict château from its uninhabitable state by installing running wa... Some sweat equity required 😉 Brian ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [April 11, 2022, 11:32pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/27 "2022-04-11T23:32:39Z")
Why not just go to France as often as you want and just stay in hotels or houses rented through Airbnb when you do? ---
**Author:** ![Gozu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gozu/32/6615_2.png) [@Gozu](https://boards.straightdope.com/u/Gozu)\ **Post date:** [April 12, 2022, 2:34am UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/28 "2022-04-12T02:34:08Z")
Why not rent? Fair question. I thought the answer was obvious 🙂 : We would like to diversify our future savings away from the stock market, especially one that is at an all time high. We are already “exposed” to it as bankers say. Inflation is 8% these days, and possibly rising. In other words, it’s good to ask if we can afford to buy, but I also asked myself: Can we afford NOT to buy? Inaction might cost us 10K a year in inflation. $20k in lost equity potential. And that’s even if we don’t rent the apartment or use it at all. Sounds mighty unwise to me. Also, and anecdotally, the last time we rushed in to buy when real estate prices were rising, waving inspection and making an offer the same day, it saved us about 100K in 9 months. And we lost 100K for not buying a year earlier. The lesson I learned is to have a bias for action and not procrastinate like I did for my 401k for 10 years. And so, as the french say, we are trying to “lier l’utile a l’agréable” (link the useful to the pleasant) with this purchase, by investing in real estate in a nice city we like (and can hopefully afford). ---
**Author:** ![SanVito](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sanvito/32/2805_2.png) [@SanVito](https://boards.straightdope.com/u/SanVito)\ **Post date:** [April 12, 2022, 8:00am UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/29 "2022-04-12T08:00:11Z")
Out of interest, where abouts in France are you thinking? This isn’t a financial question BTW, I just love property hunting. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [April 12, 2022, 8:25am UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/30 "2022-04-12T08:25:14Z")
> [@Gozu](#): > > > [@](#): > > > > if I have anything _at all_ to do with the USA, any connection _whatsoever_ 🤨. Should I ever answer yes, they will cut any relationship with me. > > What the heck? That sounds more like something you would do to a sanctioned country like Russia. Don’t they remember Normandy? Why I never! Well, the IRS started it. Basically, they tax even Americans residing abroad with no connection to the USA except citizenship. As opposed to other countries - If I depart Canada and have no connection showing I may return soon, I pay no taxes for the full years I am not resident, or on income earned abroad while not resident - except there is a basic tax on the pension I am earning from Canada… For the USA, you could have left America with your parents when you were 2 years old, technically you still must file income tax forms with the IRS on your income from anywhere. (A number of dual citizens here in Canada were dealing with that a few years ago - since the mandatory $100,000 foreign asset declaration would ensnare most Canadian retirement savings plans - and failing to declare was a punishable offense, but declaring it put you on the IRS radar for “why haven’t you filed tax returns up until now?”. I believe they clarified the rules a bit more, but I think that was only for Canadians.) Banks are also reluctant to deal with the spouses of Americans - since the USA requires joint filing, as I understand so the spouse is similarly creating a risk for the bank. That was an additional issue for dual citizens here, the risk the bank they dealt with for most of their life would cancel their accounts if they found out they were American. AFAIK there’s no tax on foreign property, but you must declare assets or property over $100,000 (?) held abroad. I assume this also means if you later sell for a profit, that money is taxable in the USA. (and France?) I assume France has similar rules to Britain about renovations to heritage buildings, if you end up going that route. Again, you need a visa AFAIK to live/visit in the EU more than 90 days a year(?). For less than that long, why would you bother buying a property? I know here in Canada, if I don’t have someone physically checking my house (every day or two) while I’m not home, my house insurance could be void. As others mention, I would assume a property management firm might take care of that? Is an apartment in France like North America - here, if a condo building needs major repairs - say to a leaky roof, or garage pillars - then everyone has to chip in an assessed amount to do the work. (unless you can defer the work, like they did in Florida…) What about heat, electricity, insurance, other expenses? Like I said, you have to anticipate that the cost of the purchase is not the only expense. Not sure how municipal property taxes work in France. I also recall reading France has a “wealth tax” assessed on your total assets; not sure how that applies to foreigners, especially non-millionaires. ---
**Author:** ![Pardel-Lux](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pardel-lux/32/20182_2.png) [@Pardel-Lux](https://boards.straightdope.com/u/Pardel-Lux)\ **Post date:** [April 12, 2022, 8:26am UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/31 "2022-04-12T08:26:00Z")
> [@Gozu](#): > > What the heck? That sounds more like something you would do to a sanctioned country like Russia. Don’t they remember Normandy? Why I never! It is the way the USA wants it, the European banks would rather do without this threat from the IRS. I guess the USA considers this to be a sanction against Europe, potentially at least, and not a burden on the USA (their citizens will cope, of course: it’s _the law!_). This is also relatively new, post Clinton for sure. Your wife may be Australian, but she will be asked whether she has any business relationships with the USA, income there, shares… or a husband. I find it difficult to google this subject, as when I try anything related to banks, Europe and taxes the first results are flooded with Russian assets because of sanctions ans Ucraine, but I found this: > **[What to do when a client has an undisclosed foreign account](https://www.journalofaccountancy.com/issues/2013/dec/20138321.html)** > > CPAs often have clients with an interest in or signature authority over a foreign account. The IRS has emphasized compliance in reporting requirements for U.S. owners of foreign accounts, but many taxpayers may still not know their responsibilities... It is rather long and more centered on Swizzerland, but shows how complicated the matter can be. Perhaps asking a tax adviser would be a good idea. I would still consider renting and investing in something else. But that is just me, of course. > [@Gozu](#): > > We would like to diversify our future savings away from the stock market, especially one that is at an all time high. Just as an aside: the stock market in the USA has been at an all time high around 75% of the time during the last 120 years, has it not? The exceptions being post '29, post '73, post dot(com) and post '08, and only post '29 for a substantial period of time. ---
**Author:** ![SanVito](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sanvito/32/2805_2.png) [@SanVito](https://boards.straightdope.com/u/SanVito)\ **Post date:** [April 12, 2022, 9:42am UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/32 "2022-04-12T09:42:36Z")
> [@md-2000](#): > > Again, you need a visa AFAIK to live/visit in the EU more than 90 days a year(?). For less than that long, why would you bother buying a property? 90 days within 180 days, so you can effectively stay there for six months a year, just not all in one go. And presumably the OP might consider renting the property out when they aren’t there - that’s my plan. They’ve already stated it’s an investment to enjoy, not a home. > [@md-2000](#): > > I know here in Canada, if I don’t have someone physically checking my house (every day or two) while I’m not home, my house insurance could be void. As others mention, I would assume a property management firm might take care of that? Interesting, I’ve never heard of that for home insurance at least here in the UK. I mean, how would they know? > [@md-2000](#): > > Is an apartment in France like North America - here, if a condo building needs major repairs - say to a leaky roof, or garage pillars - then everyone has to chip in an assessed amount to do the work. (unless you can defer the work, like they did in Florida…) Highly likely, I would have thought. > [@md-2000](#): > > What about heat, electricity, insurance, other expenses? Like I said, you have to anticipate that the cost of the purchase is not the only expense. Not sure how municipal property taxes work in France. I did a broad calculation for a 3 bed rural house which worked out about €300 per month, including broadband, gas & electric, insurance, and property taxes, of which there are two for non-residents. These also include TV licence and waste collection. Of course, that doesn’t include property management fees or service charges for apartments. Or maintenance. > [@md-2000](#): > > I also recall reading France has a “wealth tax” assessed on your total assets; not sure how that applies to foreigners, especially non-millionaires. Non residents are only taxable on this wealth tax if their property is worth over €1.3million. Of course, you would need to pay tax in France on rental income, and capital gains on selling if the property has increased in value - not sure if there’s a threshold there. ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [April 12, 2022, 1:43pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/33 "2022-04-12T13:43:08Z")
> [@Gozu](#): > > We would like to diversify our future savings away from the stock market… My wife and I did something similar, well, she did as it was her money. She originally wanted to buy in Chicago, which I was against. She eventually bought a nice place near San Diego, which is closer (only a 10 hour drive from where we live). Financially, it was worked out well in this housing market, but quite a bit of that is due to the location. Even so, there are continuing costs that you need to consider. Yes, it does diversify our holdings, but it has it’s downsides too. How often and for how long will you be able to visit? You will spend much of your time there in the first months, maybe a year, doing minor repairs and improvements. I don’t know your location, but for me if we bought in Chicago it would have been a real pain as that’s a good two day drive. Frankly, I wouldn’t ever go if she bought in Chicago, but San Diego is a long but reasonable drive. ---
**Author:** ![Gozu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gozu/32/6615_2.png) [@Gozu](https://boards.straightdope.com/u/Gozu)\ **Post date:** [April 12, 2022, 4:27pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/34 "2022-04-12T16:27:48Z")
Note: inflation is now 8.5% as of today, making my search even more justified and urgent. > [@SanVito](#): > > Out of interest, where abouts in France are you thinking? This isn’t a financial question BTW, I just love property hunting. Toulouse is #1, followed by Montpellier in France. My younger brother lived in both. There is no science to it 😃 > [@"md-2000](#): > > Well, the IRS started it. Yeah but it’s the European banks that said US customers aren’t worth the extra hassle that are being rude. I feel rejected. > [@](#): > > the USA requires joint filing, as I understand so the spouse is similarly creating a risk for the bank. The USA doesn’t require it. You just pay more taxes if you file separately so few couples do it. > [@](#): > > AFAIK there’s no tax on foreign property, but you must declare assets or property over $100,000 (?) held abroad. I assume this also means if you later sell for a profit, that money is taxable in the USA. (and France?) Hmm, good point. Yeah that makes sense. Thanks for the info. > [@](#): > > I know here in Canada, if I don’t have someone physically checking my house (every day or two) while I’m not home, my house insurance could be void. As others mention, I would assume a property management firm might take care of that?[/quote] > > Wow, that’s very surprising. What about vacations? We leave our house empty several times a year. > > [quote] I also recall reading France has a “wealth tax” assessed on your total assets; not sure how that applies to foreigners, especially non-millionaires. we’re definitely not wealthy enough for that tax. Likely we never will be, but fingers crossed we are! 😃 > [@Dag\_Otto](#): > > > [@Gozu](#): > > > > We would like to diversify our future savings away from the stock market… > > there are continuing costs that you need to consider. Yes, it does diversify our holdings, but it has it’s downsides too. > > How often and for how long will you be able to visit? Not often and not for very long. It is imperative that it either be vacant or under some A to Z agency management of some kind where they don’t need to contact us for anything except to ask how much we’re willing to discount our rent to get tenants quickly and maybe approve repairs once in a while. There are no direct flights to Paris from our home, much less Toulouse! it’s a 20h trek doormat to doormat at best. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [April 12, 2022, 4:32pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/35 "2022-04-12T16:32:24Z")
> [@Gozu](#): > > There are no direct flights to Paris from our home, much less Toulouse! it’s a 20h trek doormat to doormat at best. I’ve made that trip before. It definitely left an impression. I don’t envy you Lautrec to Toulouse. [JFTR: I probably _could have_ helped myself. I chose not to.] ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [April 12, 2022, 5:02pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/36 "2022-04-12T17:02:58Z")
> [@Gozu](#): > > Not often and not for very long. I seriously suggest that you buy a property closer to where you are located. You’ll be able to visit and enjoy it much more often and it will very likely still perform quite well at it’s main job of asset diversification. When you want to go to France, be like **Dewey Finn** and stay at hotels or vacation rentals. It’s not like Toulouse is a huge attraction. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [April 12, 2022, 6:44pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/37 "2022-04-12T18:44:57Z")
> [@Gozu](#): > > Why not rent? Fair question. I thought the answer was obvious 🙂 : > > We would like to diversify our future savings away from the stock market, especially one that is at an all time high. We are already “exposed” to it as bankers say. Inflation is 8% these days, and possibly rising. In other words, it’s good to ask if we can afford to buy, but I also asked myself: Can we afford NOT to buy? Inaction might cost us 10K a year in inflation. $20k in lost equity potential. And that’s even if we don’t rent the apartment or use it at all. Sounds mighty unwise to me. I don’t know about anyone else, but it was not obvious to me that you thought, “Perhaps we should diversify outside the stock market. I know; we’ll buy a second home in France!” And if your goal is diversification, direct ownership of foreign real estate is only one way of accomplishing this. It may not be the best way, which is one reason I suggested talking to a financial advisor. You could instead, for example, invest in REITs or a mutual fund that’s in the real estate sector. You are correct that the stock market is at all-time high. But so is real estate, I think. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [April 12, 2022, 8:58pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/38 "2022-04-12T20:58:47Z")
> [@Gozu](#): > > Yeah but it’s the European banks that said US customers aren’t worth the extra hassle that are being rude. I feel rejected. The “hassle” is that if the IRS decides the bank failed in its duty, they will I think fine them 1/3 of every transaction the bank does with a US bank. or some similar penalty, until it is all put right. (I read an article and the fine was some extraordinary imposition on the bank) The upshot is, if you are a bank that does any business even close to the USA, (like, do you have customers who accept VISA cards and may expect payment from US tourists?) the fine can become very hefty. Then, you need to pay expensive lawyers in the USA to sort out whether the bank was at fault, and the case can drag on for a while - when is a legal matter ever short and sweet? And why would the IRS be in a hurry to settle and give back money, when they have the money in their paws? It’s a huge amount of extra paperwork and high risk with no great reward to have American customers. Oddly enough, just Americans. Nobody else has been the 500-lb gorilla in the banking world. > [@SanVito](#): > > Interesting, I’ve never heard of that for home insurance at least here in the UK. I mean, how would they know? If the insurance inspector says something like “vandals apparently turned on the taps and plugged the drains and the evidence is the water ran for a week”, or “the rodent damage is obviously a month or more old” or any other such issue. My father-in-law (who used to be an insurance agent) is happy to check our home regularly when we’re on vacation. I heard the story of the fellow who had an electric on-demand water heater. they were away for the weekend when the cat walking across the taps turned on the hot water. fortunately, they were only gone for the weekend and the drain was not plugged, so they could still afford the electrical bill. ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [April 12, 2022, 9:18pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/39 "2022-04-12T21:18:52Z")
Never mind, I think my numbers are off ---
**Author:** ![Gozu](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gozu/32/6615_2.png) [@Gozu](https://boards.straightdope.com/u/Gozu)\ **Post date:** [April 12, 2022, 10:15pm UTC](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537/40 "2022-04-12T22:15:13Z")
> [@Dewey\_Finn](#): > > REIT > [@Dewey\_Finn](#): > > > [@Gozu](#): > > > > Why not rent? Fair question. I thought the answer was obvious 🙂 : > > > > We would like to diversify our future savings away from the stock market, especially one that is at an all time high. We are already “exposed” to it as bankers say. Inflation is 8% these days, and possibly rising. In other words, it’s good to ask if we can afford to buy, but I also asked myself: Can we afford NOT to buy? Inaction might cost us 10K a year in inflation. $20k in lost equity potential. And that’s even if we don’t rent the apartment or use it at all. Sounds mighty unwise to me. > > I don’t know about anyone else, but it was not obvious to me that you thought, “Perhaps we should diversify outside the stock market. I know; we’ll buy a second home in France!” And if your goal is diversification, direct ownership of foreign real estate is only one way of accomplishing this. It may not be the best way, which is one reason I suggested talking to a financial advisor. You could instead, for example, invest in REITs or a mutual fund that’s in the real estate sector. > > You are correct that the stock market is at all-time high. But so is real estate, I think. Upon re-reading, You’re right. It’s not obvious. 😅 I knew about REITs and it is a great advice. It spreads the risk over many properties and there is little overhead. I did not know about real estate mutual funds. We might go that route if the realities of buying are too daunting. [Previous page](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537.md?page=1) [Next page](https://boards.straightdope.com/t/what-is-the-best-way-to-finance-a-2nd-home-abroad-in-france-in-our-case/962537.md?page=3)