How many gites to survive?

Gite Owners Forum

How many gites to survive?

timc17 21/02/2007, 18:00

My wife and i are thinking of buying a large house with two/three attached gites as a way of earning a living.

We would need to borrow approx 125k (euros) to fund the purchase. Obvious question - would the income from the gites be enough to cover the borrowings and likely running costs? We already have an income from the UK which is enough to live on but nothing more.

All comments positive and otherwise welcome.

Tim

Re: How many gites to survive?

Claire 21/02/2007, 18:09
I was working for an Estate Agent last summer and an English family phoned with a similar query. They were told not to even think of coming to France to make a living from a gite business without some sort of other back up. She suggested that three gites would be the absolute minimum that would be necessary to eke out even a small income. We have a gite that we could let out three times over for the main two holiday weeks in the summer, the rest is a struggle. We usually let a maximum of nine weeks during the summer period. Luckily for us it is just a hobby as we have another source of income.

Re: How many gites to survive?

Cassis 21/02/2007, 18:27
Unless the property in question is already run as a gite business, my usual view is that it is impossible to predict what income you can expect from your investment. Some gite owners claim to be able to rent for only 12 weeks a year, another person I know says they did 20 weeks their first year from scratch. Seems to depend on location, quality, price, competition, marketing ... averages mean nothing.

If the net return (after deducting your labour costs, interest payments, maintenance, etc.) is likely to be under 10% of capital investment then I'd say stuff it and find a better use for your dosh.

Re: How many gites to survive?

Llwyncelyn 21/02/2007, 20:00

Hi I would not wish to be associated with doom and gloom for there are positives. But with respect and without wishing to be anything else than helpful then go to the library and obtain one of the standard text books on economics. It is in France pure supply and demand and history is littered with new entrants to the market and what happens is that the commodity price drops and therefore it is a struggle to fund 125000 euros. Say the rate is 4% pa then interest without capital repayment is 5000 euros per year. Then say 15 years to repay the capital plus insurance on each of your lives? Plus commitment fees plus Notaires fees plus plus plus.

Finally may I suggest that you carry out research and detailed research you may not find it is for you.

rdgs

Re: How many gites to survive?

andyh4 22/02/2007, 7:52

First of all it depends where you will be located. Much of France seems to be saturated with Gites and B&Bs but some parts are not. This can make it very tough for new entrants if the area is already saturated.

So first piece of research. Do an internet enquiry for your area and see how many places are still available (end February) for July and August. None or very few - then possibly looking good. Lots - then you are going to need some very special unique selling point to draw the punters in.

Let's assume the news is good, then broaden your search to June and September - how many free places now available? Keep going until you have the picture from Easter through to the end of October - anything outside of these periods is a bonus unless you are in a skiing region - in which case you need to reverse the logic somewhat with peaks in winter and maybe July August and the quiet periods from Easter to June and September to just before Xmas..

Now you have a view of what the period is where you can expect good custom. Lets say July and August good, the rest of the year looks like plenty of availability - so not good. Lets also take Llewncelyn's mortgage terms 125k over 15 years - repayment will be around 1300€/month. So for an 8 week season you will need to make roughly 2000€/week - and this will only just pay of the mortgage - no monies for repairs and replacements and no money to pay for your lifestyle.

Also 15 years is a pretty poor Return on Investment, but you could also factor in the unknown increased (hopefully) value of the property. So 2000/week divided by the normal rental price for the period in your region will give you the number of gites you need.

If at the end of all this it still looks attractive, then good luck.

If not then I have saved you a lot of aggro and am prepared to accept yoou kind consultancy payment.

Andy

Re: How many gites to survive?

Llwyncelyn 22/02/2007, 8:15
Andy I am first in the queue for consultancy. However I suggest that also one has to look at the footprints into the region. If there are limited or no gites in the market does that mean that the market does not exist.

Re: How many gites to survive?

Cassis 22/02/2007, 8:23
It's a fair point, Llwyn, and one that exercised us when we were looking for a suitable place for B&B. Andy's suggested plan of research should reveal the answer.

Re: How many gites to survive?

Pancake 22/02/2007, 8:31
My biggest grump is is that some dont reply to emails. I asked for a 4 month stay and never got a reply.I am still waiting.I even tried a second mail..I wonder if they want my money or is this just bad managment on the website that they pay to advertise one ?...maybe I just picked a bad one.

Re: How many gites to survive?

Cassis 22/02/2007, 8:40
Maybe they've taken a holiday - have you tried ringing them?

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