Property Letter 3

Posted by admin in Property Letters | May 27th 2002

We have had a number of responses, and out of those quite a number of questions.

Arising from questions asked:-

What type of property are we looking at, and is it possible for interested people to choose what they want to invest in? Basically we are in a narrow range, looking at high income rental properties, or as high as we can achieve. These are almost by definition, small and in the highly marketable tourist/commercial centres of Nice and Cannes (Nice and Cannes are also close enough to each other to enable the properties to be managed properly.) The bigger properties may be interesting as long term investments, and may suit some people, especially those who might want to make use of them, and who don’t need immediate income. We plan to identify a smorgasboard of properties, and it will be a case of first come first served. If one strikes you and you believe that it sounds right, is in the correct price bracket, or that you could go into it with somebody else, we will need to move fast.

In our property letter No 2, we gave you an analysis of four properties in Cannes, one of which was Le Neptune (as there has been a specific enquiry about it). Three of the properties have sold in the time we were away in Italy. We don’t know which one is left but will be in Cannes tomorrow (Monday) and establish that, as well as view other properties. If there are any there tomorrow on which decisions must be made, which we think there will be, we will let you know.

On our return we saw three properties in Nice on Thursday which were very interesting – let us just tell you about those now, and we will come back to you in the next couple of days with others that we may see in Cannes tomorrow, along with any that may still be left from our first visit.

Ave Victor Hugo Euros 100 000
Studio, 4th floor
29 sq m
Lovely view over historic sq with palm trees and a very old church
3 blocks from the sea (Promenade des Anglais)

Completely refurbished
Brand new kitchen, modern lighting.
Excellent bathroom
Small balcony
(Guy and Vicky may buy this one but please indicate if you are interested in case we decide not to.)

Old Nice Euros 140 000
42 Rue Droite
Studio with mezzanine level in historic building
3rd Floor with 52 sqm
Newly renovated flat in Vieux Nice on narrow pedestrian street
In the old city buzzing with character, restaurants, galaries and markets.
Wide stairs but no lift.
Small entrance hall, marble floor, spacious living with two large windows plus shutters onto street below
Mezzanine level open to lower level, adds 35 sq metres of floor space
Brand new kitchen and bathroom.
N.B. Parking garage a few hundred metres away,

73 Promenade des Anglais Euros 236 000
Ground Floor 2 bedroom flat
Directly overlooks the famous Promenade des Anglais and the sea
Prime position.
Refurbished two years ago, modern 2 bedroom, 2 bathroom flat
Requires minor redecoration.
Good kitchen, all equipment included i.e. dish washer and washing machine
It has a balcony at the front, and access to private courtyard at the back.
Problem: owner requires 30 000 Euros in cash therefore 206 000 to be financed

Another question asked was whether we were considering buying a block, rather than individual properties. Blocks are simply not available unless one buys them ‘off plan’, before they commence construction. We looked at a number of these plans, and the prices per apartment are appealing, and the plans look lovely. Problem is, they will not be ready until, on average, 18 months to 2 years time. Payment starts immediately, and continues on a phased basis and as a pure investment they are very attractive. There are simply no new properties available in completed blocks. We haven’t seen any, as they are all bought well in advance, ‘off plan’. The property market here is booming we have discovered, and that is borne out by the fact that some of the properties we really liked were gone in days, and as I said, new property is not available.

How do we allocate properties to interested people? It’s got to be on a first come first served basis. If there’s one that grabs your attention – fits your budget, let us know and you will be the first. All the properties we detail we would buy ourselves if we were buying that many. They are attractive, well priced by local standards, well positioned, with a good rentability factor, and we would stay there ourselves quite happily. Those are basically the criteria we apply.

In my first property letter I said that if this thing got off the ground we would like to recoup our ‘discovery’ costs. This trip and the work we have done has been an expensive exercise, and I propose that I charge each of you on any property you buy a 2.5% (of the value of the property) finders fee upfront. Thereafter the Management Company will have to look after itself by providing a service to us. That is normal.

How much of a response do we need to justify it all? We are going for it even if we are alone. We believe it provides what we are looking for as an investment vehicle, with the right mixtures of income and growth, and we will also set up a Management Company to look after our investment, and find enough properties to manage in order to justify its existence. We are sure that in doing so our properties will be better looked after, better marketed, and achieve higher occupancy than if we were to commit them to a local service. We will buy two properties this week, and add to those as and when we learn the systems and see the results. Having said all of that, if we knew that we were buying 10, we would be in a better position to negotiate in all sorts of areas. We have in the last few days had interested responses from 8 people, including one in the UK. Please if you are seriously interested, let us know by return of e-mail. The sooner the better. In cash terms the first thing we need to come up with is a 10% deposit to secure the property.

The couple that have expressed an interest in running the Management Company here have confirmed in the last few days that they will do it. I will let you know soon who it is, but they will be here later this year (probably about August/September). That is about how long it will take for transfer to be completed on our properties, and if the properties are available for rent before they arrive, we will put them temporarily with another company. When they come here first, Vicky and I will come with them for a few weeks to introduce them to people and the scene here.

Will likely email in the next day or two.

Guy and Vicky.

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