Is a houseboat on the Seine a good investment?

During our vacation to Paris last month, I decided to stay on a houseboat on the Seine. “How did you get the idea?”, I was asked this question many times. Well, I have a friend in Paris who lives on a houseboat. I had been to her boat before, and always thought it was such a great idea being the adventurous person that I am. Here was my chance to experience it!boat on seine1 - Project M: Mind & Money

Like any other real estate, Location, Location, Location is the key! I hit the jackpot and found one right in the middle of Paris. I had Musee d’Orsay to my left, Grande Palais to my right, and Eiffel Tower at a 30 degree angle to my right. Right in front of me was a gorgeous Haussmann style apartment building with a giant terrace on the top. It just doesn’t get any better. The view alone is worth a million!

The boat is docked, and it took a day or 2 to get used to the swaying from the river waves, especially as bateaux mouches cruised by. Let me warn you, there are A LOT of boats on the Seine. That didn’t bother me though, and I quite enjoyed the ritual of waving at the tourists passing by, checking out the Parisian police on their speed boats wondering if they were on a donut run (or is that a croissant run?) and sometimes even dancing to their music if it happened to be a party boat. It’s summer in Paris, with a glass of rosé on the deck, I’m in heaven!boat seine2 - Project M: Mind & Money

A professional hazard of being a “build wealth through real estate” person – on the 2nd day, I thought to myself “how much does it cost to own a boat like this? would it be a good rental investment?” The seed was planted and over the next few days, I found the answers I was looking for.

Here I’m going to share my initial analysis for 2 different types of rental: 1) vacation rental, 2) long-term lease rental.

Let’s look at the fixed costs first.

  • Cost to purchase, for a boat like the one I stayed on (3 bedrooms, about 90 square meters), it would cost around 650K euros.
  • There is a monthly mooring fee, based on the length and width of the boat. Again, for the boat I stayed on, it would be about 800 euros/mo.
  • Every 10 years, it is obligatory to do a maintenance check at the chantier, and maybe about 3000 euros per year for maintenance repairs and painting.

Next, variable costs:

  • For vacation rental, property management fee would be about 25% of the total rental income. That would include cleaning charges.
  • For long term rental, I would factor in a 15% vacancy and leasing fee.

Now let’s look at potential income.

  • Vacation rental, occupancy rate is about 70%, so at 400euros/night, annual rental income would be around 102,200euros
  • Long-term rental, it’s about 3500 euros/mo = 42,000 euros/yr

Based on these numbers, my back-of-the-envelop ROI calculations are as follow (taking into account of currency conversions, so my calculations are based on US dollars):

  • Vacation rental = around 7%
  • Long-term rental = around 2%

Risk factors:

  • With a houseboat, you don’t own land, you don’t even own the dock space. The license to moor at that specific location has to be renewed every 5 years from the city of Paris. I had the good fortune of meeting and learning from my boat neighbors who have been living on their boat for 33 years, raising 3 children. While it has been historically stable so far, it’s never guaranteed. And if you can’t continue to moor at that golden location, most of the value in your boat would vanish.
  • There is a ban on airbnb rentals in Paris, for apartments and houseboats. So, technically vacation rental on these boats are illegal. As my friend said, if I owned an apartment and get caught with airbnb rental, they can fine me, they can sue me, but I will still have and retain the value of my apartment. But with the boat, they can easily not renew the mooring license and all of my investment will be gone.

Conclusion:

As romantic as it sounds, the numbers aren’t sexy given the risk level! Will I move to the next level of investigation? Most likely not. Will I come back as a renter? Absolutely! As an independent woman of building wealth through real estate, I continue my search for the next investment that makes sense.

 

 

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Yulin Lee

Yulin Lee

Yulin is a Money, Wealth & Financial Coach who helps women reduce stress and live a happier & easier life by having their finances under control. It’s her own journey to financial freedom that fuels her passion to bring more women onto the path of living a purposeful life without the money constraint.

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