Hot investment tip

Tahminae Madani looks at the growing trend of tourists choosing to rent holiday homes over hotels - and what it means for investors

The past few years have een a rising number of ourists and visitors to France choosing to spend a week or two in a rented flat or holiday property rather than the usual hotel or bed and breakfast.
The decision to rent a furnished flat or house versus a room at a hotel or B&B has numerous advantages.

A rented home provides the space and privacy that travelers in big groups or those engaged in sporting activities usually need (or prefer). For families with young children, it offers the ability to control their child's meals, have easy access to laundry facilities and room to let their children relax without worrying about other guests or the safety of the children in a separate hotel room.  A rented house or flat is generally more cost-effective and ideally suited for the rising number of people taking last  minute mini-breaks based on low-cost airfare destinations.

Our clients are always pleasantly surprised at how affordable a week in one of our designer-furnished flats is compared to a week in a three or four-star Paris hotel," says Julie Cade of www.alacarteparis.com.
Unlike a hotel, a rented holiday home also gives visitors a feeling of actually living in France. A fully-equipped kitchen is one frequent requirement for visitors planning on enjoying the best of French produce and markets. And with more space to spread out, and a proper living room, you don't feel the need to spend every waking minute outside.

Doing the sums

An example for the. purchase of a one-bedroom apartment in the trendy Marais area of Paris

• Purchase price and sourcing fee: €415,000
• Renovation and furnishing: €60,000
• Loan: €400,000 (25-year loan at 5.09%, capped at 6.09%)
• Cash including down payment and completion costs: €105,500
• Monthly loan payment: €2,360
• Monthly life insurance payment: €115
• Monthly net rental income at 80% occupancy: €2,425 (net of management and maintenance fees)

Try before you buy

It is also a popular choice for the 'try before you buy' market. Those looking to invest in a holiday or retirement home will often rent a place for a week at different times of year before deciding on a preferred location. After many rental clients requested help in acquiring and furnishing their own buy-to-let flat in Paris, Alex Wagner, founder of A La Carte Paris, has launched a sister company www.alacarte­ invest.com. He can source, furnish and market the apartment while offering a guaranteed net yield of 4.3%.

The rented holiday home can also help create a far more distinctive and memorable vacation experience. Gathering friends together in your private villa with pool in the stunning Cap d'Antibes or holding a dinner party in a beautifully furnished flat in the trendy Paris St Germain area are experiences that even the newest boutique hotel would have trouble competing with!

The ease with which these experiences can be booked has helped prompt the rise in their popularity. Gone are the days of sending away for piles of brochures and then hoping for the best! Organising a furnished flat holiday let is now as easy as making a
hotel reservation. Many professional furnished rental management companies or even rental-by-owner sites are now online with automated reservation systems and credit card payment facilities.

What does this trend mean for you?

This rise in the demand for furnished holiday rental flats and homes is good news for overseas property investors and those considering buying a second home in France.

Renting out a holiday home for a few weeks a year is a straightforward way of defraying the cost of ownership while still allowing you to enjoy the property when and for however long you want. Many of France Home Finance's clients have succeeded in structuring a self­ funded investment while still using their property a few weeks each year. Jim and Marilyn Reynolds, for example, purchased their home in the Luberon Valley in September 2005. After renovations, they launched their website www.provencedreamhouse.com in December and are already almost completely booked for the June to September high season.

With proper planning and preparation, you can own a beautiful self funding French property investment that you can enjoy for years to come.

Tahminae Madani is managing director of France Home Finance. Tel: 0871 733 6983 www.francehomefinance.com