PL26 – 27th June 2003.

Posted by admin in Property Letters | June 27th 2003

Dear All,

Vicky and I are back in Cape Town for July and August, and it’s beautiful. It is so-called mid winter and well over 20 degrees, the sun has shone all day every day for the five days since I arrived back, and there’s not a breath of wind! I can’t believe it and of course it won’t last, but it is lovely while it does.

I have been in Cannes for the last 9 weeks and what a lot we have achieved in the time. Remember that our son Lao and his wife Katherine are there on a full time basis now – they live there, in a lovely rented home a few miles out of town, with their little dog from the SPCA called Jerry who rules the roost. They are very settled and happy.

What do we all do? Well it’s settled into a natural division of responsibility, the lines of which we cross freely and frequently in order to help each other whenever we need to.

Guy – communicates with you, and the agents (many of them) in order to try to find the best value investment properties that exist in Cannes. I continue to focus on investment properties (unless an individual is looking for something specific like a holiday home) and I look at literally hundreds. When I am able to locate a really good proposition I try to match it to the needs of those who I know are waiting and wanting to buy an apartment, and I put it out generally for you all to have a look at. Once someone has decided on a property that suits them I negotiate on their behalf, agree a price if we can, and sign an agreement. Then I help the buyer all the way through the bureaucratic landscape of lawyers and notaries, through the loan application process, and all the way to the signing and transfer of ownership into their name. Vicky helps me enormously in the selection of properties, and I have bought very few without her (only one or two where she has not been in Cannes and I have had to make decisions rather quickly to secure). Most need varying degrees of renovation and/or furnishing and decoration before they can be rented out. I, with Lao’s help, deal with the builders – get their quotes for the work and liaise with the new owners about costs, plans, transfers of funds, etc.

Vicky – with her experience, has helped Lao introduce an accounting system based on Quickbooks, and the two of them keep it right up to date, producing full statements of account for every owner each month once transactions start, and keeping it in line with French legal and tax requirements. Azur-Accom is a registered French Company obviously, and subject to French laws.

Katherine – is a very artistic and talented decorator. She does a brilliant job with the budget she is given to convert a bare renovated room into a home away from home by furnishing and decorating it with care and originality. She travels far and wide in search of exactly what she wants for an apartment that she is working on, and has a real understanding of the costs involved, and the financial constraints of investors, and yet manages to create something original and lovely each time.

Servicing and Maintenance – this area is if anything our Achilles heel. At the moment we are stretched to manage it, and have had the fortunate use of a couple of Masters Students from the University of Sophia Antipolis just down the road who have been happy to earn some pocket money. However, they return to their native Columbia in September. I am sure there are more students who will happily fill their shoes, but it is not ideal – and can only be regarded as an interim arrangement.

I believe there is a business opportunity for some one young and go-ahead. Do you know someone who may be interested?
French Language is essential – or at least a willingness to get stuck in and learn it fast.
A European Community Passport is essential – for at least one member of the family.
Azur-Accom now has 22 apartments which need cleaning and maintaining on a semi-regular basis to a very high standard. This includes minor (or major) maintenance, and could well include so much more than just that. For example sheets and towels etc. need constant changing and the system begs innovation and efficient management. Lao needs help meeting and greeting guests, and welcoming them to their apartments. This involves time and travel, and typically numbers arrive on the same day, especially before conferences and festivals. Shopping to put in place the welcome packs in any one of a number of sizes and configurations which are becoming a popular feature of what we offer guests, takes time and L & K need help. Quality control of the apartments is actually quite difficult as they are spread out, and all are different and again, help is needed. However, there are more than 22 apartments in Cannes, and if I were going to do it I would look very quickly to expanding beyond Azur-Accom, and for avenues to complement my existing servicing business. For example I would offer to buy everyone’s sheets and towels from them, and then rent fresh linen to all the apartments under my control on a rental by rental basis, and contract the actual laundering out to a commercial laundry.

We are one year down the line – It seems amazing to me that we have been in the business that long now. I was excited a year ago about the possibilities of investing in Cannes, and others saw the merit and were able to join us. A year later we have together invested in 22 apartments (six in the last two months) and I have absolutely no regrets about any of them. I am far more excited than I was then!
Our rental operation has got going and it is obviously a snowball. The more people who know about us and tell their friends, the more bookings we get, and already we are seeing repeat visits (one so far, who has been back a second time, and talking of a third) and people coming to us because we have been recommended to them. It takes time for this process to happen, and we are doing all we can to speed it up. Of course we have suffered as a result of happenings beyond our control – Iraq war, SARS – but industry figures are coming up now, with the summer.
On the capital appreciation side we have seen an increase in property values along the Cote d’Azur, and in Cannes in particular, and it looks to be in the region of 12 to 15% from what we personally can see from revisiting properties we have seen before, or which are similar to those we bought a year ago. Our observation is consistent with local knowledge, and the stats we can get hold of. There is a slowdown in property prices in the UK as everyone knows, and generally they may level out or even decline, but long term trends have been pretty consistently upward for many decades, and the French property market has not been as overheated as Britain’s or even Spain’s in the last decade. In addition we are concentrating on smaller and highly rentable units in one of Europe’s most marketable areas. I am confident in the medium to long term, and if we have significant short term gains such as we are experiencing at the moment, that is a bonus as far as I am concerned. We look to returns from rentals to bring us income first, and capital appreciation as a medium term wealth builder.

I am more than happy with our first year, and when I look at how far we have come I feel confident that the second year will see us established as major players in property rental in Cannes, offering guests a significantly better service than is the norm, and our owners reaping significant and pleasing returns on their investments. That is our aim.

A couple of important issues – Firstly, many people have asked to stay on this mailing list just to get the news and follow what we are doing out of interest, and I am sure that some will one day be able to join the team as investors. I have no problem with that, but now that we are – for the sake of efficiency – mailing you via a ‘Yahoo Group’ address, you have to put up with a bit of a commercial. I am sorry about that, but there is nothing I can do about it – it is the advertisers who pay for the service.
If you look at the bottom of this or any Yahoo Group letter there is the facility for you to ‘unsubscribe’ from the list if you wish. In other words you don’t have to ask me to stop mailing you – you can do it yourself. On the other hand, if someone you know wants to be on the list, please help him or her to ‘subscribe’ in the same way. Or ask me to include them and I will happily add their addresses.

We still need your help please. We need to be known as the people to call for accommodation in the South of France, and some of you have already introduced your friends and family to us for which I sincerely thank you. Please continue to tell everyone you can about us – we so appreciate and need it. Marketing our apartments and filling them with guests is undoubtedly our single biggest goal and challenge.

For anyone particularly interested in investment – I wait to hear from you. I will happily send information which is far more detailed than would be appropriate in a letter like this. Details about how much you need to start an investment, the costs to get it going, details about the loans available and more financial information.

With warmest regards to you all,

Guy.

Leave a Comment