Property Letter No. 13 – PL13 � 29th July 2002

Posted by admin in Property Letters | July 29th 2002

Dear All,

I wrote this letter yesterday and completely lost it trying to copy it from Word to Outlook! Now I have to try to remember what I said. I wrote to most of you in April in my Property Letter No 1 telling you of our plans to travel to France, Spain and Portugal to look into the possibility of investment property as an alternative to a rather uninspiring stock market, which since then has gone even more pear shaped.

I continued to send information on our progress only to those of you who replied or expressed an interest, not wanting to be the sender of unwanted mail. Some of you were interested in investing, and some just in being included in the information loop for the time being.

A great deal has happened since then, and I write to you again in case you are interested. Please let me know if you or any of your contacts would like to be on the mailing list in the future. If you want to know what we have been up to, then I can send you some of Letters 2 to 12 with information, figures and calculations that we have used in evaluating and buying properties.

So what have we done so far?

Vicky and I spent two initial weeks in the South of France. We have been there many times over the last 12 years and have good friends there, and it was anyway our first choice of country to work and invest in. We found it sufficiently interesting from the property point of view in that first couple of weeks that we returned to Italy to regroup and consult with family and friends, and cancelled all our plans to go to Spain and Portugal. We returned to France for another few weeks.

We focused on the areas of Cannes and Nice, and after looking at over 180, we have bought 8 apartments. Three are mine and Vicky’s, one now belongs to a South African investor, and four to Zimbabwean investors. We have not had it all our own way, and have lost a number when we weren’t able to move fast enough, so a couple of would-be investors have not got the property they would like yet. The market is very fast there.

* In every case we have focused on Rentability, and the potential for a good Return on Investment.
* The most expensive apartment so far cost 170 000 Euros.
* The least expensive cost 80 000 Euros.
* The Average over the eight apartments was 101 000 Euros, being just on 60 000 Sterling. (100 Euros = 60 Pounds)
* All except one are very small.
* All have a great position.
* Some need a little tidying up, paint and minor improvements, and some are recently refurbished.
* Some are sold furnished, some not, and in some the furnishing is so terrible it’s got to go.
* All are being bought with a 60% mortgage at 4.1% interest over 15 years.
* We have made lower offers and have achieved significant reductions in the price of some apartments. Interestingly the bank have valued all of our properties higher than the prices that we have paid for them.
* All are individually owned (or shared) and the new owner is free to trade, sell, rent, manage or occupy the apartment as he sees fit.
* Vicky and I ask for a 2.5% “finder’s fee” upon transfer to help cover our not insignificant costs.

What next?

We take transfer of the first two apartments on the 31st July, and the rest of them over the next couple of months. The process normally takes two or three months to complete.

Vicky and I have set up a Management Company, and Steve Pratt from Marondera who many of you know will run it. We go to Cannes with Steve and Avril (who are working hard on their French) to settle them in and introduce them to everything and everyone in October. Steve will start on the 14th October and his job will be to take control of all the marketing and renting, manage the maintenance, servicing, and all the administration of our properties. There will be a charge of 12.5% of rental receipts, which is competitive. We have already established a web site, and will continue to develop it – obviously we can’t even take photos of the apartments for the site until we take possession and finish furnishing them.

In October we will also be looking at apartments to buy again. Quite a number of people are still waiting for one, and we need about 20 on our books to justify Steve, so we will take on management of other apartments if “ours” are not soon sufficient. Also for those of us who have bought already it will be an advantage if more people come on board, because we will be able to achieve economies in various areas, and establish ourselves quickly as providers of good and reliable serviced accommodation. We are only at this stage interested in short term (weekly) rentals for holidays, and more importantly to business. Cannes is one of the foremost destinations in Europe and the World for conferences, seminars, festivals and expos., and in 2002 there are 200 booked to take place there. Some of them are looking for accommodation for an incredible 20 000 individuals, and although the figures seem surprising, there are companies there that exist solely to source and provide the accommodation that their corporate clients require, and we will obviously get onto their books a.s.a.p.

Please let us know if you or anyone you know is interested in learning more about the property investment in France that we have started. We are very excited about it, and believe that there is enormous potential, and that we will gain strength in numbers. I hope that we have about 20 apartments by this year end, and then to grow as demand dictates in the years ahead. I have worked closely with Steve for years and have absolute faith in his dedication and ability, and if the job grows beyond his ability to manage it alone, as it may well do quite soon, then we will get someone in to help him.
Vicky and I will not be living in Cannes but will visit a few times a year.

I am sure the letter I wrote yesterday and lost was much better, and that there is lots that I have forgotten to say second time around! Anyway, c’est la vie.
Our next letter will deal quite substantially with the whole issue of the management of our properties, what we foresee happening on the ground on a day to day basis, how we intend to market, service and maintain, and how the accounts and administration will work for each owner.
We will only continue to mail those of you who ask us to.

Vicky and I send our love and best wishes to you all.


Our home telephone : 00 27 (0)21 434 0554
Cell phone : 00 27 (0)72 310 2603

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