So can you make money from renting out your holiday home? Well that’s a tricky one, it all depends on what you consider to be making money. Having one gite, as we do, and living in the UK and therefore paying a management company to sort everything out for us does mean that, at the moment, we would probably be better off putting the money in a savings account and sitting back relaxing while watching your money grow. We do earn some money but if you look at it as a percentage of the value of the gite it isn’t a massive amount at the moment but we have really only just started out.

This shows you that we’re certainly not experts at this and it is quite a competitive market but hopefully we can build things up over time. So unfortunately we’re never going to make our millions from this but we do have a lovely holiday home that covers it’s costs and makes a little bit of money. Obviously if you have more gites and live on site so that you can manage the changeovers yourself it can certainly give you enough to live off, as there are plenty of people that do that. However this blog is about buying a holiday home and renting that out, rather than a full gite business of which we have no experience, so I’ll stick to that.

So what do you need to consider. Well obviously you have your outgoings:

• Changeover Costs – Cleaning and preparing your gite after each guest
• Taxes – Taxe Fonciere and Taxe d’Habitation
• Utilities – Electricity, Gas and Water
• Insurance – Buildings, Contents and Public Liability
• Mortgage Payments
• Advertising Costs / Web Hosting Costs
• Ware and Tear of Fixture and Fittings
• Building Maintenance / Decoration
• Telephone / Internet Costs
• Banking Costs – Bank Charges / Currency Conversion
• Any extra costs, such as logs for wood burning stoves
• Travel Costs to go out and do Winter Close-down / Spring Opening if you shut your gite down over winter
• Winter Checks – if you close down over winter you will need somebody to make sure things are all okay and your gite hasn’t lost it’s roof

  

The above costs should give you an annual figure that if you met would mean your gite should cost you nothing, except in real terms the lost revenue from interest payments if you just stuck all the money in the bank. You should also think about your start-up costs, equipping your gite with everything you need at the beginning and also any major projects you would like to undertake in the future, building a new patio, loft extensions etc. You can then add your target profit margin e.g. 5% to the overall costs and that would give you a target revenue figure to aim for.

You then need to think about how many weeks you are likely to be able to realistically rent out your gite and you can then work out, for low / medium / high season (or more sub-divisions if that’s what you like) what your rental rates should be to meet your target revenue figure. You then obviously need to look against the competition and see how realistic your figures are and you may need to lower your profit margin to set realistic weekly rental figures. If you’re very lucky you may be able to increase your weekly rental prices and therefore your profit margin (I wish).

So what can you do to increase your profit? Well there are three things, increase the  number of weeks booked by appealing to people who holiday outside of the core summer months of July and August (in our case), usually those with children under school age, couples or those with children who have left the nest; cut your costs, and / or increase your prices, by adding something unique about your property that will make people want to go there and willing to pay more, or just highlighting what you already have better than your competition so that people can understand why your prices appear higher but actually they are just great value.

You also need to think about when you are starting your marketing in comparison to your high season. As we started in April 2007 and our high season is July and August we started with lower prices as a lot of people would have already booked their holiday and so we had less time to fill our gite. We are now gradually increasing our prices over the next few years as our marketing increases and more people find our gite. For this season, our first full season really, we had high season booked out during October so maybe next year we could increase our prices a little.

When setting our weekly rental prices we have an all inclusive price, as we personally don’t like seeing a price for a holiday and then having to add lots of extras onto it to work out the total price. This is a personal thing though, so you can always separate certain costs out as extras on top of your base weekly rental price but when comparing against the competition, make sure you do compare like with like, e.g. if they include cleaning, linen and towels and you charge extra.

You then obviously need to consider tax. France has a tax agreement in place with the UK and you can therefore offset your French tax payments against your UK payments. I won’t go into the tax regimes here as that is a whole different kettle of fish.

So there are lots of things to think about when setting your prices. The main one really is what is the competition doing, how booked up are they, how much competition is there in your area, how many weeks can you really get and can you increase that number, does your property have anything unique that will mean you can set higher prices than the others and do people want it. Set them too high and nobody will come, too low and it could end up costing you money and if anybody has the answer, please let us know.

Brittany Gite – 2 Bedroom Cottage / Gite near Dinan, Brittany, France

Buying, Owning and Running a Gite in Brittany Blog

©Derek Arkwright 2008