Study of the rental possibilities for a three-room property in Nice

During this study, we would compare several different scenarios for a rental investment in Nice with a capital of 300,000 €. This study is based on realistic hypotheses drawn from our experience in managing rented property.

The scenarios we look at

There are several ways you can rent out your apartment on the Côte d'Azur and especially in Nice:

  • classic, year-round lets (lease of one to three years)
  • student lets (a 10-month contract with holiday lets in the summer break)
  • seasonal lets (on a weekly basis) throughout the year

Comparing these various options, taking as an example a three-room apartment (with two bedrooms) in perfect condition of a value of 300,000 € and ideally located in Nice's "Golden Square".

Detail of the various scenarios

Case 1: Classic let based on a year-round contract

The apartment is let for 12 months of the year for a rent of 900 € per month.

Annual rent 10 800 €
Agency fees 900 €
Gross annual income 10 800 € - 900 € = 9 900 €
Gross annual return 9 900 € / 300 000 € = 3,30 %

The risk of the tenant defaulting (not paying their rent) does exist in this case but it is a limited risk. You can protect yourself against it by taking out insurance, but your rental return will suffer.

Case 2: A student let for 10 months of the year with holiday letting in July and August

The apartment is let for 10 months of the year (from September to June) to a student for a rent of 900 € per month. Electricity and Internet are included in the rent.

10 months rent @ 900 €/month 9 000 €
Agency fees 900 €
Internet and electricity (100 €/month) 1 000 €
Gross income for 10 months 9 000 € - 900 € - 1 000 € = 7 100 €

The apartment is then rented out for eight weeks over the summer and calculating for a (pessimistic) occupancy of 75%.

6 weeks rent @ 100 €/night 4 200 €
Running costs * (28%) 1 176 €
Internet and electricity (100 €/month) 200 €
Gross income for 6 weeks 4 200 € - 1 176 € - 200 € = 2 824 €

Consolidating these figures over an annual basis:

Gross annual income 7 100 € + 2 824 € = 9 924 €
Gross annual return 9 924 € / 300 000 € = 3,31 %

The risk of a tenant defaulting is very low with students. Furthermore, you may use you apartment for two weeks every summer (or you can rent it out for those two weeks to increase rental revenue).

Case 3: Holiday lets throughout the year (with an occupancy rate of 75%)

39 weeks rent @ 100 €/night 27 300 €
Running costs * (28%) 7 644 €
Internet and electricity (100 €/month) 1 200 €
Gross annual income 27 300 € - 7 644 € - 1 200 € = 18 456 €
Gross annual return 18 456 € / 300 000 € = 6,15 %

The risk of tenants defaulting is zero with holiday lets as the rent is always paid in advance. The apartment is available for your personal use for the remaining 13 weeks of the year. You can also take measures to boost your occupancy rate to increase your rental revenue.

In all three scenarios, you will be liable for property tax (700 € to 1,000 € per year) as well as building maintenance fees (100 € to 150 € per month)

Conclusion

Holiday letting all year round is undeniably the most interesting option from the point of view of financial returns, flexibility (you can simply declare the apartment unavailable if you wish to use it yourself) and security (the risk of a tenant defaulting is zero). If you would like to speak to us about this type of property management, you can contact our estate agents directly.

* You will find a list of all the services we offer for holiday lets on a special page.

Contact details
Tel: +33 (0) 493 878 333
Fax: +33 (0) 493 877 677
Email: Email address
Address: 73 bd Victor Hugo
06000 Nice
France