Mini Guide: 5 Property Investment Strategies on the French Riviera
Is it still possible to make profitable property investments on the French Riviera? It is, with the right Property Investment Strategy! Investing in real estate is a good idea, because stone has become much more than a simple safe haven.
More and more people have understood this and are embarking on the adventure, comforted by the beautiful stories of these « coach-investors » who started from nothing or almost nothing and are living comfortably from their investments.
But be careful, real estate investment should be taken seriously, because there are significant risks and the amounts involved are high. In addition, the type of investment can vary according to many criteria, such as price, economic vitality of the target region, tourist attraction, and so on. What may work in Lille or Béziers will not necessarily work on the French Riviera.
3 types of property investment
I will distinguish here three types of real estate investments:
1 – The rental property investment
2 – The heritage investment
3 – The short-term investment, like value-add or flipping
These three types of investment can be linked to build a property investment strategy. A rental investment can also be a heritage investment.
The rental property investment, also called “buy-to-let”, consists in buying a property, at the best possible price, and to rent it out. There are basically three main types of rental possible in France: bare rental, furnished rental and seasonal rental.
The heritage investment consists in buying a flat or a out, to rent it out in the mere purpose of paying the loan, without expecting a shot-term cash-flow. This is a way to build up a real estate portfolio for your retirement or for the next generation
And finally, the short-term investment consists in buying a property, most often requiring work, at the lowest possible price and renovating it to generate added value upon resale. This is typically the core business of property dealers.
With these few important clarifications in mind, we are going to introduce the 5 Property Investment Strategies that we recommend if you want to win the gold medal for best French Riviera investor of the year!
Property investment on the french riviera: a good idea?
If you have in mind a property investment project in France, you may leave out the French Riviera. Indeed, the high level of prices per square meter necessarily impacts the final profitability. This is especially true now that rents are regulated in urban areas with more than 50,000 inhabitants. In this cities there is an imbalance between rental supply and demand. The lessor is no longer allowed to change the rent during the lease and the rent of the new tenant may not exceed that of the previous tenant. This concerns 75 municipalities on the French Riviera.
For example, according to the average rent per square meter, in Nice you can rent a 25 m² studio at 475 € per month, for an annual income of 5,700 €. However, the purchase of this studio will cost you an average of 135,600 € (120,000 € + notary fees 6,600 € + agency fees 6,000 €). The gross profitability in this case will be 4,2%, knowing that all the expenses of joint ownership not being able to be invoiced to the tenant, your net profitability will be lower than this rate.
A reasoned purchase will determine the profitability of your property from the outset. Otherwise, the investment will not be more interesting than some solid bonds on the stock market.
You could then turn to seasonal rental, rubbing your hands in advance of the good reports that you will obtain from a rented property in the second French tourist region…
We are sorry, but we must dampen your spirits. Indeed, this type of investment, which was very profitable for years, is now less interesting. Airbnb rentals are now regulated by law: you have a few exemptions if you rent out part of your main residence, but there are now a plethora of dissuasive administrative constraints for second homes purchased with the aim of renting them out on Airbnb.
So, is it still possible to make profitable property investments in the French Riviera?
The answer is yes! Provided you apply the 5 property investment strategies you will discover here below. Ready? Let’s go!
Winner Property Investment Strategy 1 - The Spanish Inn
Roommates are the hot new thing! Indeed, sharing an apartment also concerns working people or young retirees who prefer this formula allowing them to save on the rent while having a little more space than in a studio, even if shared.
And for you, dear investor, it is more interesting. Renting a room is much more advantageous than renting a studio.
Indeed, a well-equipped room in a decent apartment can be rented for up to 600 euros. Three rooms can therefore represent up to 1,800 € of monthly rent, so much more than a studio.
The first step to success in this strategy is to find an apartment that is not too expensive, easier to find as roommates are less demanding on certain criteria, like neighbourhood, exterior, elevator, etc.
For example, a 65 sqm apartment at 215 000 € or 3,300 € per sqm in Nice, totalling 247,385 € including notary fees, agency fees and 5,000 € of fixtures and fittings, will produce a profitability of 5.82% with three rooms rented at a minimum 400 € per month and of course less work!
Ok I know… You are wondering how to find an apartment at 3,300 € per sqm in Nice?
Well, my latest acquisition in Nice was an apartment bought in 2020, on the edge of one of the best areas of the city, for… 3,173 € per sqm.
The Spanish Inn can be a great strategy for real estate investment in Nice.
Renting out 3 rooms in a flat rather than a single studio apartment can have several advantages, especially when considering the needs of foreigners looking to settle in the French Riviera:
1. Diversified Tenant Pool: By offering individual rooms in a flat, you can attract a more diverse range of tenants, including singles, couples, and even small groups. This can increase your chances of finding suitable tenants.
2. Higher Rental Income: Typically, renting out multiple rooms can generate higher rental income compared to a single studio. Each room can be rented separately, potentially yielding more income overall.
3. Shared Expenses: Tenants in a shared flat can often share common expenses such as utilities, internet, and even cleaning services. This can make the cost of living more affordable for tenants, making your property more attractive.
4. Community and Social Aspect: Some people prefer shared living arrangements as it provides a sense of community and social interaction. This can be particularly appealing to newcomers who may want to make friends and connections in the area.
5. Flexibility: Offering multiple rooms allows for flexibility in lease terms. You can have short-term and long-term tenants, accommodating various rental needs.
6. Easier Maintenance: A flat with multiple rooms may be easier to maintain compared to a larger studio, as you can address maintenance and repairs on a per-room basis.
However, there are also challenges associated with renting multiple rooms, such as managing multiple tenants and their interactions. It’s essential to establish clear rental agreements and house rules to avoid potential conflicts.
Ultimately, the choice between renting out multiple rooms or a single studio depends on your target market and property. It’s advisable to assess the demand in your area, the preferences of potential tenants, and your investment goals when making this decision.
And anyway, it’s always essential to conduct thorough research and due diligence before setting up any Property Investment Strategy. If you have any specific questions or need more information about this strategy, feel free to ask.
Do you want to know more about the Spanish Inn Strategy?
Winner Property Investment Strategy 2 - Diamonds are forever
The large number of vacation rentals on the French Riviera has a strong impact on the decline in profitability. However, there is a niche market that is not affected by the crisis: luxury. Indeed, the supply of high-end products remains limited.
Airbnb has understood this by creating « Airbnb Plus » which includes a choice of accommodations that meet quality and design criteria, and « Luxury Retreats » which offers specially selected luxury accommodations with personalized services.
To achieve greater profitability, it is now necessary to stand out from the crowd, offering tastefully renovated apartments, paying attention to details and incorporating additional services (Jacuzzi, quality linens, hospitality products, concierge services, etc.). In a nutshell: it is essential to offer a luxurious experience at higher prices.
Buying a deluxe property for luxury rentals in the French Riviera can be a lucrative investment strategy. Here are some advantages offered by this Property Investment Strategy:
1. High Rental Income: Deluxe properties typically command higher rental rates, attracting affluent travellers who are willing to pay a premium for luxury accommodations. This can lead to substantial rental income.
2. Consistent Demand: The French Riviera is a popular destination for tourists and expatriates seeking a luxurious lifestyle. There is a consistent demand for upscale rentals, and not only during the peak tourist seasons.
3. Appreciation Potential: Deluxe properties in desirable locations tend to appreciate over time. Investing in such properties can yield long-term capital gains.
4. Attracting High-End Clients: Owning a deluxe property allows you to cater to high-end clients who value luxury and exclusivity. This can lead to repeat bookings and a positive reputation in the luxury rental market.
5. Personal Use: You can also enjoy the property yourself when it’s not rented out, giving you the opportunity to experience the luxury lifestyle of the French Riviera.
However, it’s essential to conduct thorough market research, consider maintenance and operational costs, and work with professionals who understand the luxury rental market in the region.
Additionally, it’s crucial to provide impeccable service and maintain the property to a high standard to attract and retain discerning clientele.
However, it is important to keep in mind that the basis of profitability is a smart purchase.
An apartment at €10,000 per sqm will not be profitable unless you offer ultra-luxury accommodation. It’s not impossible, you just have to take into account that you are engaging in a service similar to luxury hotels, with high level services and staff able to deliver them.
Case Study
A friend of mine, following my advice, embarked on this type of project. He bought, in 2018, a 60 sqm apartment, with two bedrooms and an exterior, in Cagnes-sur-Mer. To the purchase price – €4,000 per sqm – it was necessary to add the notary fees: 31,200 €, and the work: 30,000 €.
The total investment amounted to 301,200 €. He managed to rent at a smoothed average price of 68 € per day and obtain an annual income of 24,820 €. This brings his gross profitability to 8.24%, which is double that of a normal seasonal rental.
In conclusion, the Diamonds are Forever strategy offers numerous advantages. From the potential for high rental income and property appreciation to attracting high-end clients and enjoying personal use, it can be a financially rewarding and personally satisfying venture.
However, success in this endeavour requires careful planning, market analysis, and a commitment to maintaining the property’s luxurious standards.
With the right approach, a deluxe property in this beautiful region can not only provide financial returns but also allow you to share the allure of the Côte d’Azur with discerning travellers from around the world.
Winner Property Investment Strategy 3 - Paths to Glory
If you want to keep your investment simple, you don’t have to give up on the idea of renting, bare or furnished. You just need to think outside the box. I advise you to look for your property outside the urban areas and away from the coast. In places where, for the moment, the purchase prices are lower, but the rents remain interesting.
For example, if your target is Nice, I advise you to find a property around Contes. It is an area that can be quickly reached by road and attracts many people working in Nice or Monaco.
Prices are, for the moment, lower than in Nice. Therefore, you could realize this type of operation:
– acquisition of a 60 sqm apartment for 200,000 €, including notary fees, to which it is necessary to add approximately 10,000 € of work to arrange it pleasantly.
This will allow you to claim a rent based on the high end of the price range, at 16 € pre sqm, or 960 €. The annual rental income of €11,520 represents a return of 5.76%, higher than what you could have achieved in Nice on long term rent.
The Paths to Glory strategy can have several advantages:
1. Affordability: Properties in the hinterland are often more affordable compared to the coastal areas, making it a cost-effective investment.
2. Rental Income: The demand for rental properties in the region remains steady, especially during the tourist season. Renting out your property can provide you with a steady source of income.
3. Diversification: Investing in the hinterland diversifies your real estate portfolio, reducing the risk associated with solely relying on coastal properties.
4. Potential for Capital Appreciation: While coastal properties tend to have higher initial prices, properties in the hinterland may appreciate in value over time, offering the potential for capital gains.
5. Quiet Environment: The hinterland offers a peaceful and scenic environment, attracting renters seeking a quieter lifestyle away from the bustling coastal areas.
6. Lower Operating Costs: Property maintenance and taxes may be lower in the hinterland, which can increase your return on investment.
However, there is increasing demand for real estate in the immediate vicinity of cities, which will inevitably affect prices as the housing stock is reduced. If you are looking to make an investment with a reasonable down payment, this is the right time and place.
On the other hand, it’s essential to conduct thorough research and consider factors like location, property condition, and rental demand before making an investment decision.
Additionally, property management and legal considerations should be taken into account when renting out a property.
Consulting with a local real estate expert – like us, or a financial advisor – can help you make an informed choice based on your specific goals and circumstances in order to set up your Property Investment Strategy.
Book your free Paths to Glory consultancy call
Winner Property Investment Strategy 4 - $600,000 in the sun
This is the strategy I adopted for a project I’m working on for a personal investment.
This strategy involves finding a large enough house (about 130 m²), far from the first coastal strip, but close enough to the city and employment areas. High rental demand, but a relatively reasonable sale price.
Here is the recipe to buy a villa on the coast for your old age:
A house at 500 000 €, 40,000 € of notary fees (8%).
25,000 € agency fee (5%), 30 000 € to separate the house in two and 130,000 € of personal contribution.
Round to 595 000 and reserve for expenses.
I anticipate your next question: why two apartments? Simply because an apartment will be much easier to rent than a whole villa.
Now, you take your two apartments that you rent 1,500 € per month each, that is 3,000 € in total, or 36,000 € annual income.
Mix your €150,000 down payment with a €465,000 loan over 22 years at the current rate of 3,90% to get a monthly payment of €2,626.
Your rentals cover your loan, you even have a margin to cover some maintenance costs and you become the owner of a beautiful house on the French Riviera! This could be the perfect Property Investment Strategy for you!
Splitting a villa into two flats to rent out can have several advantages, especially in a region like the French Riviera. Here are some benefits to consider:
- Increased Rental Income: By dividing a villa into two separate units, you can potentially double your rental income. This can be particularly lucrative in a high-demand tourist destination like the Côte d’Azur.
- Diversified Tenant Pool: Having two flats allows you to attract different types of tenants. You might have long-term renters in one unit and vacationers in the other, providing stability and flexibility.
- Higher Property Value: In many cases, dividing a villa can increase its overall market value. This can be advantageous if you plan to sell the property in the future.
- Shorter Vacancy Periods: With two separate units, you’re less likely to have both units vacant at the same time. This can help maintain a steady rental income stream.
- Adaptability: If you ever decide to use one of the units for personal use or as a guesthouse, having the villa divided can provide you with that option.
However, it’s crucial to consider the costs and regulations associated with such a project. You may need permits and construction work, and you’ll need to ensure that both units meet legal and safety requirements.
Additionally, property management for two units can be more demanding than for a single property. Overall, it can be a worthwhile investment, but careful planning and research are essential.
No panic: FRH is here to help you!
Winner Property Investment Strategy 5 - La dolce vita
So far, I haven’t told you much about Liguria and the Italian Riviera, an area in which FRH also operates.
So, I’m going to give you a revelation: Liguria is a land of real estate opportunities and it is still very little exploited!
Purchase-renovation-resale operations, of the « property dealer » type, are increasingly difficult to carry out on the French Riviera, given the purchase prices. On the other hand, they are quite possible on the Italian Riviera.
On the seaside, prices are roughly equivalent to those on the French Riviera. In fact, the Ligurian beaches are the closest to the economic heart of Italy and its many executives.
Thus, the seaside resorts of the Riviera quickly became fashionable, their popularity attracting foreign buyers and celebrities, such as George Clooney in Alassio, which resulted in an explosion of prices per square meter.
However, the hinterland is incredibly cheaper, because the area is economically not very active and the marketing of tourist attraction is almost nil. As a result, the real estate market in this part of Liguria is not at all tight.
And yet, it attracts a niche of potential buyers for vacation homes. Indeed, the Nordic countries, and more particularly the Belgians and Germans, are fond of this authentic, traditional, quiet countryside, not too far from the sea. Real estate agencies from these countries have even specialized in this Italian market.
Here is the type of property that you can find in order to realize a purchase-renovation-resale operation:
I found a house is located only 20 minutes from the beaches of Alassio, a popular resort in the area.
The house was in good condition, and offered 190 m² of main house and 146 m² of outbuildings with about 5 acres of land!
Its price: 119,000 €! If we only take into account the living area of the main house, it gives us 626 €/m². Yes, you read it right…
Including a sum of 150,000 € for a quality renovation (exposed stone, window frames, choice of materials), this brings the total investment to 285,700 € (including agency fees and local taxes).
After renovation, this house will be able to be resold for 350,000 € to buyers who like this type of product. The total profit of this operation amounts to 64,300 €, that is to say a R.O.I. of 30 %.
I confess, I hesitated to share this secret, so sure am I of the potential of this region.
Have you heard about Napoleon Bonaparte’s quote: “Let China Sleep, for when she wakes, she will shake the world “?
Well, I’m sure we could choose the same quote for this region: The day Liguria wakes up… and this day is coming, wait & see… Or rather, don’t wait!
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