Almost 70% of our clients want to buy a property, and use it themselves a couple of times a year, but they are mainly looking to support the cost of purchase through renting seasonally. What should these buyer’s choose?
There’s a phrase I like: “if you’re jumping on the bandwagon, your already too late“. Buyers who bought in Nice ten or more years ago were getting onto that bandwagon as it was just setting off, and have certainly profited from their investment. Yet many of them are selling; the bandwagon has reached its destination. If you need rental return, let’s make sure you don’t buy their cast-offs.
Back in the good old days of 2006, Homeaway’s only competition was Craig’s List. Buying even small rickety studios guaranteed a decent return. An owner could hand us the keys and within a month be looking at 50% booked calendar. Owners who bought a one bedroom in the Old Town of Nice with no outside space, no air-con, on the fourth floor and no lift could still find Pebbles depositing £12,000 plus in net return annually. Not now.
For some time now, we have had to refuse over 30 owners a year who ask us to take their one bedroom apartments onto our portfolio. Why? Well, we already have a few long standing one bedrooms with no outside space, and no air-con on our portfolio and struggle to fill them as much as we’d like, so don’t want any more. it wouldn’t be fair to current owners or future owners to saturate our site with more. We’re even picky about one bedrooms that do have outside space, and need to see lifts, air-con etc before we’ll consider them for Pebbles Rentals.
If we don’t think they’re a good investment of our time for just 25% commission, then why should you think they’re a good investment of your hard earned money? We’d advise anyone who needs to achieve a net annual return of over £8,000 to tread carefully before buying such properties, if annual return is important to you. Of course, if you are buying a pied à terre for you, then great, they’re low maintenance and with so many sellers desperate to get rid, a good bargain can be had.
For good rental return, there’s just far too many one bedrooms around to rent and guests want amenities like air-con (most Old Town properties can’t accommodate this). Even some smaller two bedrooms with a lack of amenities are now seeing low returns. Guests search through filters and if enough one / two bedrooms come up in their search with either outside space or air-con, then properties without amenities are not even going to be seen by potential guests. So they either sit empty, are rented mid-term or long-term, or the owner has to enter the price war grappling for the budget traveler.
You can still ride the bandwagon, but before you hop on, just be wary about what you buy, and wary of what you might be told you can earn. Come to us and we’ll show you, with the figures from all the rentals on our portfolio, how much depends on amenities, location, and how it is furnished. We’d advise those looking for the best annual return to look at least for a two bedroom apartment and to spend at least 350,000 euros. In our experience, it is now the larger, amenities abundant properties that receive the most bookings, and get the best return. This is because they are in shorter supply and therefore are not having to be so competitive on price, whereas if your apartment is a little like 100 others, and its fighting to even be seen, then prices get lower and lower all the time, and these properties fill up last, if at all.
If you buy smart, and we can help you do that, then you can still achieve 20 – 40 bookings per year. This is what 60% of our rental portfolio still achieves. 20% achieve over 250 days rental a year and these tend to be those that offer most amenities including sea views. 20% achieve less than 150 days rental a year, but invariably these are one bedrooms with hardly any decent amenities like outside space and air-conditioning.
There are always exceptions, but good ROI properties tend to be those bought for between 400,000 – 800,000 euros. But price is not everything. There is a lot of bad stock out there in this price range which won’t rent well because of noise issues, lack of windows in bedrooms, no outside space and a lack of amenities for the price, we can advise you on this.
If you’re considering buying to rent, then do speak with us and get our feedback on any contenders. No obligation. Whether you buy with us or not, we prefer to steer you in the right direction. After all, you might have found a beauty. Even if we didn’t sell it to you, we’d love the opportunity to rent it for you.