Finding a holiday home that’s also a good investment is less easy when you have to please the whole family (first published in French Property News, Feb 2018 issue)
“If you’re going to rent out a property, you’ve actually got to have something a bit special; otherwise, how do you compete?” These wise words from Nadia Jordan, a property finder (Foothills of France) and holiday home owner in south-west France, have stuck in my mind ever since we first met.
At the time of writing, France was expected to have received around 89 million visitors in 2017 and, as the most visited country in the world, that alone presents a good business case for a holiday rental investment. In 2016, tourists spent 404.8 million nights in accommodation in France. The problem is that there are so many rental properties on the market and such a range of prices, it’s important that your own investment stands out from the crowd.
I met Nadia towards the beginning of my search for a holiday home. With historically low interest rates in France and a recovering property market, I want to seize the opportunity to find a three-bedroom ‘life-enhancing investment’ property, which is no more than three hours of where we live in the Tarn department.
One of the biggest challenges is that there are so many criteria to meet. Finding something that will appeal to everyone overcomplicates the search. By everyone, I mean my French husband and I who will be taking out a mortgage, my three children (18 months, three and five-and-a-half) who need some outside space and local activities, and my parents, who will also be investing in the property.
Our budget is between €150,000 and €180,000, depending on what the property offers. We want to be able to cover the mortgage if the worst-case scenario happens and we cannot rent out the property, which means sticking to a limit.
To help us keep to the financial plan, we’ve created a ‘simulator business case’ spreadsheet in Excel, and for every property we particularly like, we run the figures to see if it works.
Factors include: estimation of work (travaux), furniture/decoration (mobilier/ deco), notaire costs (frais de notaire), financial contribution (apport), tax (taxe d’habitation/fonciere) and maintenance (entretien). Monthly costs comprise: electricity, water, telephone/ wifi, changeovers, cleaning and gardening, and house insurance.
Dishearteningly, most properties that we simulate do not provide a good enough financial outcome. Not to mention that every viewing has uncovered a horrible surprise, like internal bedroom windows, which were left out of the agents’ pictures of one property.
As we need to rent it out almost immediately, we need to buy a property that doesn’t need renovation or too much refreshing. In our price range that is a challenge. Usually the bathrooms need updating or changing, and kitchens are often unfinished.
I also want to be able to do activities at our holiday home that we can’t do from our main house. Whether it’s going to the beach, being near a ski station or doing watersports on a lake, I’d like our family life to be enriched through our choice of property.
Another factor to consider is that my mother would like to be able to walk to a cafe or to the shops from the house. Potential traffic noise and the fact that many French villages don’t even have shops, cafes or restaurants are further complications.
The journey: from Gruissan to Bages
The first property we viewed was a three-bedroom apartment overlooking Gruissan port in Aude. The beautiful view from the balcony of an apartment with two communal pools caught my eye. It was on the market for €110,000.
Gruissan has one of the biggest and most impressive stretches of golden beach on this side of the Mediterranean coast. It has three distinctive areas – port, beach and old town – and is famous for the coral-pink salt flats and salt production at the Salin de l’ile St-Martin.
The apartment didn’t make the grade. My mother couldn’t have walked up the four flights of stairs and one bedroom was marooned by the front door with the rest of the living space at the top of a steep staircase. Had I known about this unusual layout we wouldn’t have gone.
Tim Swannie, director at buyer’s agents Home Hunts, told me that keeping your market in mind and choosing a property that fits is essential when looking to buy a second home to rent out.
“lf you’re buying a villa in the south of France then a pool is usually important and if it’s a high floor then you need a lift,” he said, “Are you aiming for holidaymakers, business people, golf enthusiasts or skiers – imagine what the most important factors are for them when looking for a rental property.”
While we were in the area, we decided to cross to the other side of the etang (lagoon) and visit the little-known village of Bages.
Bages lies on a finger of land that’s surrounded on three sides by the Etang de Bages. Colourful patchwork stone townhouses overlook the blue waters, which are home to pink flamingos and traditional fishing boats.
The sunny village with its immaculate cafe, restaurant and epicerie is just how you imagine the heart of a small French village to be. Both my husband and I loved it. I excitedly snapped photographs of the glorious village houses, and the bougainvillea cascading down honey-stone walls, thinking we’d found the location where our second home would be.
I looked up property straight away and saw it was very expensive. Chitra Pullen at Pullen Real Estate would later tell me that this was due to the local property market driving prices up.
Advice from a seasoned property finder
I tweeted the photos enthusiastically – and that was how I met Nadia. She told me that she lived in the Ariege and had just bought the village house with the bougainvillea as a second home investment property. It had been a “coup de coeur”. They had fallen in love with the village during their first visit, and right away discovered that this three-bedroom central village house was for sale, for €345,000.
“It would be hard to get a better position for that property in the village,” she said. “The bougainvillea, the stone, the top terrace with views of the Med and the mountains – we were just sold, and that was it.”
We had a lot in common; Nadia was also buying with her parents and it was an investment that would serve as part of her pension when the mortgage was paid. They also needed to rent it out to cover the loan and money costs.
She told me that they saw the property in February 2017 and completed the sale in June. In the meantime, with permission from the owner, she had created a website for the property (languedoclocation.com) and advertised it on sites such as Abritel for summer rental.
With guests booked from mid-July onwards and only five days of holiday to completely change the decor before the first guests turned up, they had their work cut out. Yet they succeeded and ended up with more than 12 weeks of bookings.
“I put it at a low price to start with because we just needed to cover our costs,” she explained.
ln terms of property management, they have a local housekeeper and cleaner who is the main point of contact at the village and keeps the house ship-shape, but they don’t have a property manager. If equipment breaks, they deal with it themselves. On one day the fridge stopped working so they had to buy a new one and drive for two and a half hours to install it in the house.
This is one way to keep costs down, but Tim Swannie believes that paying the extra for a property manager is worth it: “You need someone who can make sure the property is kept in excellent condition and that rentals run smoothly. A professional property manager who has made it their career to manage French properties will have a much keener eye than a friendly neighbour, for example.”
To the mountains for year-round rentals
The property market in Bages is slow moving as well as expensive, so I had to take the search elsewhere. With year-round rentals possible in the Pyrenees, we decided to focus our attention around the popular spa town of Bagneres-de-Luchon. I needed some advice, so I saw a smart-looking one-bedroom apartment, which looked as though it was a successful rental, and contacted the owners.
Nick Reddyoff, 29, and his wife Sarah, 32, live in Yorkshire and own the apartment
(pictured below), which they visit throughout the year with their two children. They bought it for €115,000 in December 2015.
Nick told me that he initially visited Luchon as it was the closest major town on their way to climbing Aneta, the highest peak in the Pyrenees. They stopped off to look at properties and this was the first of five they saw.
“I spotted the opportunity in it immediately given the proximity of the centre of town and the south-facing aspect from the balcony,” he said.
There are four ski resorts all within an hour’s drive of the town, he tells me, and Superbagneres, accessible via cable car from the centre of town, is also within walking distance of the apartment. “So, we knew we’d get winter rentals,” he said. As the Tour de France comes through regularly, they were quietly confident about summer bookings too.
“When we learned that Luchon was a proper functioning spa town and people come for ‘une cure’ out of season, we were completely sold on it,” he added. There are also tennis courts, an outdoor lido, mini golf and the river all less than 200 metres away.
So far Nick has rented out the property for a total of 63 weeks since buying it, but he says around 66% of bookings are for less than one week. “It’s definitely different per site,” he explained. “Airbnb tend to be shorter stays whereas Homeaway, for example, is always more than seven days, which accounts for only 18% of my bookings.”
Overall the apartment has provided him with about €3,000 per year more than the cost of the bills, including the mortgage. “It’s been a perfect investment and we could make more if we changed the model slightly, a minimum of five nights for example,” he said.
Despite the success, Nick is selling the property (advertised on Rightmove for
€138,000) but this is because they are planning to either move to Luchon permanently or get a bigger place that fits the family better as the children get older.
Back to Aude on the Canal du Midi
After a couple of disappointing viewings in the Pyrenees, we headed down to the Minervois and the Corbieres wine regions in Aude. Not far from Bages, yet offering proximity to Narbonne and with the attraction of the Canal du Midi, the area had buoyant summer rental prices and some of the villages were offering properties at reasonable prices.
Chitra and Richard Pullen moved to the pretty village of St-Marcel-sur-Aude nearly 10 years ago and the properties they have for sale are mainly in villages along the Canal du Midi. Salleles-d’Aude, Ginestas, St-Nazaire, Bize Minervois and Argeliers are villages they recommend to clients. Le Somail is one that they are very keen on.
“It is very picturesque and where many people start their boating holiday along the Canal du Midi,” Chitra explained. “There are three to four restaurants, a lovely little epicerie on a canal boat, a bookshop; it’s just a lovely, quirky place.”
In terms of what you can expect to make from renting, Chitra told me that a high-quality three-bedroom property with a pool could get between €2,000-€2,400 per week during the high season. She also told me what I already suspected, that with €150,000 I may find what I am looking for but it will take time, and be more difficult to rent without a pool.
She suggested a few properties to look at, one in Paraza, another charming village on the Canal du Midi, which is an attractive three-bedroom village property with two terraces, and a separate one-bed, one-bathroom independent annexe. It is just 15 minutes from Narbonne and priced at €124,000. “I would think the rental here is more around the €650-€750 mark,” she explained. “But as it is two houses there could be ways to play around with the configuration to maximise rental.”
Another pretty Minervois village house in Ste-Valiere offers a potential bargain at the reduced price of €118,000. It has three bedrooms and two terraces, one with views of the Pyrenees.
Today my search continues and I realise that if I didn’t live in France, I’d definitely be hiring a property finder. Discovering that “something a bit special” is like a marathon; you need to push on and keep the final reward in mind, or you wonder if you’re ever going to reach the finish line.
Read the article in the February 2018 issue of French Property News or on a Holiday Home Investment – Feb 2018 – op – French Property News.