PROPERTY LETTER No : 17 (b) – 12th November 2002

Posted by admin in Property Letters | November 12th 2002

Dear All,

Following our recent month in Cannes, I need to make some comments and observations, keep you up to date with developments, and plead for assistance in a couple of areas.

The first major development that I have pleasure in telling you about is a cut in interest rates. The rate that we pay on our borrowings from Entenial Bank has been reduced from 4.1% to 3.9%. I like that bank. They try hard to look after us, their staff have never been anything but totally obliging, and charming with it, and those of you who have spoken with or met Sandrine Faivre and Brigitte Mardokh will agree I think. They often have to work under-staffed, especially as far as English speakers is concerned, and take quite a bit of criticism from the Estate Agents for taking too long. (The agents don’t get paid until transfer, and transfer is often delayed whilst mortgages are awaiting approval, and I don’t tell the agents that approval is normally delayed because of difficulty getting the information they require from us! Language barrier and distance are not a serious impediment, but they do cause delays and misunderstandings).

So I was encouraged by the agents to meet with another bank called Banque Privee Europeenne to see what they could offer us, which I did. Like Barclays and CCF before them, their interest rate is quite a bit higher at about 5.4 to 5.6%, and they have quite serious difficulties dealing with non European residents (especially Zimbabweans), etc. For now I suggest we keep our heads down and stay with Entenial who know us, and are enjoying having our business.
We need your help please. We now have 17 apartments in our group, and the number looks sure to rise. We need to fill beds. All of you have contacts all over the world who would love the South of France. Some of them will have been there before and would love a little push to go again. You are about to write your Christmas letters to your family and friends – PLEASE TELL THEM ALL ABOUT US. Christmas is a wonderful opportunity to get the message out to hundreds of people who just may come and stay, or pass the info on to someone else that might. Our ‘target’ on all apartments is 40 weeks per year occupancy, and that is achievable in Cannes, where the sun shines all year, and it is traditional to barbecue on New Years Day! People don’t realize the effect that the protection from the Alps Maritimes, and the winds from Africa have on the micro-climate of the Cote d’Azur. It is a beautiful destination, year round. Its trough season, during which they repair the streets and paint buildings flat out, and it rains a bit, is November. Christmas is busy, and in January conference season starts, culminating in the Film Festival and the Monaco Grand Prix in May. Then it’s the summer season until October.

However, we have to get onto the map. We have to get known, and build ourselves a reputation. Yes, we’ll get the website up and running as soon as we can, and advertise wherever we can afford to, for best return, and register ourselves at the tourist information bureau and with the conference organizers, etc. etc., but the bottom line is that people must have heard of us before they know to dive into our website. Nothing will be stronger than word of mouth, and ultimately people having such a good time that they come again and again.

The first year is going to be a little tough, but we will do everything we can to get as close to target as we can anyway. Obviously subsequent years will get better and better as we become known. The energy and enthusiasm that goes into getting us going will not be wanting, and the service that we are going to provide will surpass the service people are used to there by a wide margin, because the service that is normal is generally lousy.

Quality is everything. Steve and Avril, with Vicky and I, have met with Judy Davis with whom we will be working from January onwards. Steve and Avril will continue to grow partly under her tutelage, and with her 17 years of experience, and the benefit of her knowledge of all the legal and practical implications of renting out property in France. Judy manages and markets 25 Villas up and down the Cote d’Azur. It is an entirely different market to ours, catering to the rich and the jet-set for their family holidays. However, she has significant demand for well equipped and up-market smaller accommodation in Cannes for the business trips of her clients and their staff, and for shorter reconnaissance trips that her clients make when they want to view a potential purchase, or summer rental, or just want a week away. She also has nobody marketing her products in Southern Africa, and has asked us to do it. She is aware that the exchange rate is the biggest problem facing South African families, and mid summer lets are unlikely, but the European mid summer does not fit with our school holidays anyway. We are more likely to rent to Southern Africans in April/May/June or September/October, when rates are far more acceptable. She believes totally in quality accommodation, and quality service, and will not recommend any flat of ours to any of her clients if she hasn’t seen it herself. But she is keen to work with us. Some of our apartments are easy to fit into her net, and others require some work to get there. However all have the potential, because all are excellently positioned, and we need to decide how we complete them. She urges us not to compromise quality for a short term saving in investment – so I leave that with you to think about. And size doesn’t count! The principle applies to your 20 sq.m. flat as it does to the 70 sq. m. apartment.

What do renovations and furnishing cost? A run down 30 – 40 sq.m. apartment will cost about 15 – 20 000€ to raise to a really good quality. Halve that if it is just tired, but doesn’t need the bathroom and kitchen completely stripped and refitted. Furnishing should cost a further 6 – 10 000€ depending on whether you need a complete new set of kitchen appliances or not. (We will become better and better at estimating these costs for you as we gain experience, but for now they are good guesses.) (Vicky says I could be a little high.)

How do we get them done when we aren’t there? I hinted before that I had an idea for this – well, we had to find a solution didn’t we? Avril and Steve both have Masters Degrees in Fine Art, and without wishing to embarrass them, they have the flair, and the taste and good sense to do it for us. However Steve’s job description starts with a finished flat – he has to market it, sell it, organize for its efficient management and servicing, administer it, and account for it financially to the owners. So I have asked Avril if she would ‘consult’ to us on a freelance basis. She is delighted to do it, is immediately available, and already working on four of our flats. We have met a builder that we like and trust, and after having had a couple of previous quotes and discussions with others, we are using him now. Jaques has three sons, and each heads a team, while father does all the quotes, and coordinates the work of the three. His quotes seem fair, and we have visited two of his sites and are very impressed with the work that they are doing. Other people who I have spoken to who have used him before are happy with his work, his honesty and his timeliness, so I am optimistic.

Avril will contact Jaques when required and get a quote for the work you need done. If the quote is acceptable she will keep a periodic watch on the work, for quality and timeliness, and then furnish and decorate the flat according to the wishes, taste and budget of the owners. Her advice and ideas and increasing experience on the ground there will I believe be invaluable. I have total confidence that her time spent will be meticulously accounted for, and the price that I have recommended that she charge us, after some research, is 20€ per hour which is very fair to both sides.
She gives to Steve a finished apartment.

Of course they will share both functions, but that is how I see the division from you, the owner’s point of view.

We have set up a company or SARL, and Steve and Avril are now officially resident in France. The name of the Management Company is Azur Accom, and the website, which is still only in format, is www.azur-online.com . In the weeks ahead it will grow, as flats reach completion and readiness to rent out. Our bank is Credit du Nord, and we have set up a “client account” into which each owner will have to pay a small amount to allow Steve to employ cleaners, change light bulbs and other contingencies. He will obviously keep a very detailed account of individual movements in and out of it, with a cash book for each flat, and call when a top up is needed. Each owner will have his own account at Credit du Nord or another bank of his choice, into which payments will be made, and from which such costs as monthly mortgages, and taxes and levys will be paid, normally by debit order. Steve will not have access to those accounts other than to statements, so that he can advise owners if the balances are getting too high or too low, and generally help to track that payments and receipts are correct.
The Definitive Contact List :

Steve & Avril Pratt,
Wiosna Entrée ‘CD’,
34 Ave Marechal Juin,
06400 Cannes.
France.

Telephones :
Home – 33 (0)4 93 94 45 07
Fax – 33 (0)4 93 94 45 07
Cell – 33 (0)6 84 13 85 52

e-mail – admin@azur-online.comdmin@azur-online.com
website – www.azur-online.com

(Please wait a week before going onto the website – make it after 20th November. Lao and Steve are working on it Monday and Tuesday next week.)
That’s all for now except to remind you Please promote us in all your Christmas letters, and in every way you can, wherever you can. Word of mouth is critical now, and they will not be disappointed I promise.

Love and regards from Vicky and I,

Guy.

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