Investing in Rental Property in France - 1 - Sete

I spent a very positive day yesterday with Clients from the USA who are looking to invest in property in Languedoc for rental.

We are exploring a number of options, from sea-view apartments to village houses and city properties. Yesterday we spent time looking at apartments in Sete which have good sea views.

All the South of France is a fascinating mixture of different Mediterranean cultures and architecture - although Sete is in Langedoc and only an hour from Spain, it has a very “Italian” feel and the canals are reminiscent of Venice. It also reminds me a lot of Cannes and old Antibes fourty years ago. I keep saying that all vilalges and towns in Langudaoc have completely diferent characters and Sete is cerainly a “one-off” and really cannot be compared with anywhere else.

Sete is still the busiest port on the Mediterranean (in shipping movements). It is a vibrant working fishing port and the wholesale fish market is at full voice at 5:30 in the morning with the surrounding cafes and bars catering for the incoming boats. One of the apartments we looked at overlooked this part of the port with views out to the Mediterranean and some of the best restaurants only a few meters from the front door (and it had a pool).

My brief yesterday was to show properties costing under 200,000 euro,which had a sea view and which could be self financing and with a positive cash flow.

Interest rates are rising now and prices have jetted upwards for several years in all of France, also Sete is a working town and not a “beach holiday” resort - so I anticipated finding any property meeting these criteria would be difficult and a good property with charm and character would be nigh impossible.

I know Sete very well, but have much more experience with real-estate inland around Pezenas and Beziers, so I did some quick research thouhg our inter-agency databases and asked one of the best agencies in Sete to fix appointments for  four properties from my selection with a sea view and under 200,000 euro.

My clients have substantial experience of investing in rentals in the USA and this is their first venture into Europe, hence the budget price.

I have ten years experience in renting properties in France for vacation accommodation and have handled thousands of transactions, we also have a lot of ecperiencein long-term retals here, so our forcasts for income and knowledge of markeing and management costs should be valid.

I tend to err on the high side for management and marketing costs and I also compared the leisure rental potential with a long-term let income.

The four properties offered different options -

The first was a new marina/beach development close to the leisure side of Sete and the long golden beach running from Sete to Cap d’Agde. This would guarantee a good high season rental and, with strong marketing, a budget winter let.  I estimate a return after all costs and before taxes from 10 to 12 percent.

The second property was in a new apartment building yet in the heart of the old town looking down on the church and views over the harbours to the sea. Although lettable as a vacation apartment, it offered an opportunity as a longer rental for people wanting to live in a comforatble apartment for a year or more in the heart of  a traditional French town with all the shops and services on the doostep, yet a stones throw from the Ocean. With careful marketing this property again would give a good between 10 and 12 percent.

The third property was just over the 200,000 budget, but I included it as it is a new duplex appartment with three large terraces overlooking the main canal and out to sea. On the top floor of a new, well designed, building I was particularly keen to show this as it is in part of the new revitalisation of Sete and in an area that was previously crumbling warehouses interspersed with the classic merchants houses of the 18th century. The higher price suggested to me a return on investment of 8 to 10 percent, but as this is the beginning of what is becoming an exciting city center area capital appreciation will be strong.

I am not writing about any projected increases in the value of properties, I do not have a working crystal ball and no one (no matter what they tell you) can predict the future - I do believe that Languedoc has many good reasons for a continued strong and sustainable growth in property values  - better than any other region of France - but only for certain segments of the property market, not necessarily for everything.

The fourth property was a small apartment just above the main fishing prot and markets. This has a view from the balcony across the harbour to the sea and also was the only apartment to have a swimming pool. Being in the center of a city, with a pool and all the life and bustle, restaurants and entertainments within a few yards, yet quiet and secure, is a rare find and for well under the 200,000 budget. Suitable for all rental opportunities, from permant accommodation to leisure, this should easily show a net return in the 10 to 12 percent bracket I was looking for.

 All apartments we viewed had private secure parking and most apartments can offer locked garaging for 15,000 to 20,000 more.

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