In the early days of Pebbles, before the twenty-tens, if anyone asked us where they should buy for rental investment it was ALWAYS the Old Town. If an owner contacted us and said would we like to come and see an Old Town apartment to add to our portfolio, we’d eagerly set up the earliest possible appointment and wouldn’t be as particular about the standard as we were elsewhere. The Old Town had a draw for our guests like no other and guests would forgive things like the lack of air-con, the flights of stairs and no lifts. They wanted quirky, authentic travelling and the Old Town delivered. Many still do.
We still love the Old Town and it is still the hot spot for first time tourists to Nice. It’s where the Guide books tell people to visit; the atmosphere and colourful makes easy writing fodder for travel journalists and photographers. “An assault of the senses” or words to that effect are often found about this vibrant place. Being close to the Promenade, guests can see themselves buying fruit and flowers at the Cours Saleya and it’s at the heart of all the action with great restaurants such as Oliviera. Better still, on the whole you could pick up a bargain that could net you an easy 6% return – especially pre-2005.
In more recent years, we’re more cautious about recommending the Old Town if you’re buying purely for investment and are starting that rental investment from scratch. When we’re asked to consider an apartment to join our portfolio, we aren’t as eager to grab our coat to come and see. We’ll now want to know a little more before we commit our time. With over 300 properties to rent in this small little area, the competition is fierce and we now only want to add very special ones. We’d certainly be asking a lot of questions about it before we’d agree to take it onto our portfolio for rental.
Our first questions are always going to be:
Does it have (or could have) air-conditioning?
Does it have outside space?
How many bedrooms and bathrooms?
Can you send us photos please?
We now turn down about 40% of owners who approach us to manage their one bedrooms in the Old Town. Many of these owners are owners now disenchanted with their return from the Airbnb guests in both price willing to pay, and quality of guests who arrive. Often their previous guests have had a point: the properties are badly furnished and the owner isn’t now willing to invest more for the level of return we can offer. He’s already lost money in the last two years on it. They have furnished it cheaply and they have advertised it cheaply for cheap guests or travelling students. This is not Pebbles demographic; our guests rightly expect more from their stay with us.
What we largely tell all our clients when considering a purchase / already owning a property in the old town worth less than 300,000 euros is this: The property is going to enter a crowded market, with no reputation and no following of repeat happy guests. If there is no air-con, no outside space and is fairly standard, then it will be an uphill battle to stand out from the crowd. Ways to stand out are Netflix, the best décor and the best gadgets and interior designed finish to make the most of the space bought. And of course a highly visible website to advertise with. If you are buying for you mainly, with a big of investment on the side – this is fine. It’s a great place for a second home base if you plan to use a lot yourself. If rental income is much more important than personal use, think carefully on what you buy and what you can do to maximise income with the space.
If your budget stretches to circa 400,000 + then the Old Town is still a cracking place to invest. Many of our clients have asked us to find them a property in the Old Town with this budget and we’ve been able to secure them properties that have outside space, air-con (usually the two go hand in hand), high floors, lifts and sometimes a view. We find them properties that do stand out from the crowd or are being sold at the right price that a decent return on investment is still possible. Finding something tucked away which is still Old Town, but a little more quiet is also a plus. Another big plus is one that has already been rented before (if the database of past guests is included in the sale).
Pebbles has one bedroom apartments in the Old Town that have earned circa 25,000+ euros net to owners annually*. We have two bedrooms that have earned over 35,000+ euros net to owner annually. They usually see circa 250+ nights booked annually. At the same time, we also have some properties in the Old Town that achieve less than 5000 euros (but very few). The difference is ALWAYS amenities and décor.
Twice last year we had sales clients that we spent a long time trying to find a property. The Old Town was where both wanted to buy, but both would consider near our shop (a very good area to buy). Both shared a wish of buying for investment at least 80% and then their own use about 20%. One had a budget of a maximum of 300,000 euros, the other a maximum of 350,000 euros.
We were looking for places that tick the boxes we knew would secure decent rental return, the budgets were a constraint. Admittedly, it was sometimes slow and they wanted to buy quickly, but these things can’t always be rushed. They will have this investment for the next 10 years plus. The money meanwhile burned in their pocket.
In around April we got a call from our 350,000 euro max budget client following her last search with us in February. She’d popped over for a weekend to see a friend and this friend had an estate agent friend at the Port. To cut a long story short, they’d found “the one”, but had had to up their budget to 450,000 euros to secure it. Would we manage it? Sure, sounds great we said, sorry we couldn’t find this for you, but we were looking for something 100,000 cheaper as per your brief. Licking our wounds we went to see it. Some friend! You couldn’t install air-con and it had no outside space. It did indeed have a view of the Port but was first floor right next to the nightclub. Their budget was blown so there was no scope for décor improvements for the next two years either. We had to walk away and I understand she has decided to just rent to friends and family finding it too hard to manage themselves and deal with reviews.
The other also found something with another agent and asked us to manage it. She had paid around 250,000 for a one bedroom apartment in the Old Town on the third floor (no lift – but that’s normal). She had been searching with us and another agency and this agency had said it was a good rental. She’d found out from the previous owners that we actually used to be agent for it for rental. Would we take it back? The thing was we’d see such diminishing returns for this apartment over the last three years (with no outside space, no air-con and a renovation that hadn’t held up over the years, as well as some neighbour issues) that we’d only kept it on our books for so long out of loyalty whilst we tried to sell it. We hadn’t thought it worthy of her consideration so had never included it in the search. In fact, prior to the owner changing agents we’d tried unsuccessfully to sell it for eighteen months. We simply couldn’t sell it to an investor purchaser when we knew what we did about it.
The shame of it for all of us was that a rare find had just come onto the market. Well, not a shame for the owner of our Skyline apartment. We had clients who had previously been owners of ours and sold some five years back. They missed Nice and were looking to buy again. Our now re-owners bought this fantastic top floor apartment with two spacious terraces and air-conditioning near to our office. At 275,000 euros this was a steal and has secured 8 bookings for 2017 by the second day of the year. There are many more skylines out there, just get in touch and if you can be patient, we’ll find you one. We’ll always be looking for what’s right for you, in your budget. Do tell us if your open to moving the goalposts though if you want to to avoid an own-goal. The more we know, the better we can help you find your perfect place.
*These figures are based on a mean average of earnings between 2013 – 2016 inclusive.