French Holiday Home Investment: My Costs and Figures
November 12, 2021
A French holiday home can look like a very simple investment when you start with the nightly rate. Multiply that by a few months of bookings and the income soon looks attractive. But that isn’t the calculation I want to rely on. I want to know what the property cost, what it takes to run, who does the work and what happens when bookings don’t arrive.
In my November 2021 video, I went through the numbers behind a property I owned with my mum in France. We had secured our first booking, but much of the annual income discussion was still a forecast. That distinction matters. A booking is evidence of demand; it isn’t proof of a full year’s profit.
The figures below are rounded historical amounts, mostly expressed in pounds as I did in the video. They’re a case study in assessing a holiday let, rather than a claim that you can buy the same property or achieve the same returns today.
You can also watch my original French holiday home investment video on YouTube.
What our French property actually cost
We bought a farmhouse and a bungalow, at roughly £40,000 each. That gave us an £80,000 purchase cost. The farmhouse then needed about £25,000 of renovation work, and we allowed around £10,000 for furniture. With approximately £5,000 in notary and associated purchase fees, the total came to about £120,000.
Those are the numbers I want at the front of the calculation. Saying we’d bought a £40,000 farmhouse would have described only one part of the project. It wouldn’t have told somebody how much money was committed to the wider investment or what was needed to get accommodation ready for guests.
Furniture is particularly easy to underestimate when you’re comparing a holiday property with an ordinary rental. Guests expect a usable home for their stay. Beds alone don’t provide that. Kitchen equipment, seating and the smaller items all have to fit the standard you’re offering.
Our investment was bought with cash. That reflected our circumstances, including my mum’s preference about borrowing. It wasn’t a demonstration that finance is unavailable in France, or that every overseas property should be bought outright. It simply means there was no mortgage payment in the operating forecast I discussed.
If you’re comparing this with a mortgaged investment, that difference needs to be reflected in the figures. A return on £120,000 of cash is not directly comparable with a return calculated against a much smaller deposit while leaving the loan out of the discussion.
An estimated value isn’t money in the bank
At the time, an agent suggested a value of around £180,000, or approximately €210,000. I also discussed a lower figure of about £150,000 if we wanted a quicker sale. These were indicative estimates, not a completed sale or a guaranteed valuation.
Against the £120,000 spent, the higher estimate suggested that we’d added value. That’s encouraging, but it isn’t a realised profit. Selling costs, tax and the price a buyer actually agrees would affect the outcome. Currency movements could also change the sterling result.
I like looking at both income and potential value, because they tell me different things. The income helps support the investment while we hold it. The value gives an indication of what the asset may be worth. Neither should be used to quietly fill a gap in the other.
A property with a promising valuation still needs enough cash to pay its bills. Equally, a good month’s bookings don’t establish what somebody will pay for it on the open market. My article on property price versus market value explores that distinction further.
The first booking and the annual forecast
Our first booking was for ten nights over Christmas at £250 a night. That was £2,500 of booking revenue. It was an encouraging start, but the annual figures in the video were scenarios built from nightly rates and occupancy assumptions.
At £250 a night, 50% occupancy across 365 days produces £45,625 of gross annual revenue. At 70%, it produces £63,875. I rounded those to roughly £46,000 and £64,000 in the discussion.
The word gross is doing an important job there. Those figures are before management, booking-platform charges, running costs and other expenses. They are also based on achieving that average nightly rate across the occupied nights, which may not happen when prices vary by season or discounts are needed.
I described 50% as a conservative case in the video. It should still be treated as an assumption, not a minimum result. Occupancy can fall below 50%, especially while a property is establishing itself or if demand changes. An empty night doesn’t earn half the advertised rate. It earns nothing.
It’s also possible to achieve a good headline occupancy rate by reducing prices substantially. That’s why I would look at occupancy and the actual average rate together. A busy calendar isn’t enough if the amount collected doesn’t cover the work and costs involved.
What the higher nightly rate depended on
I also considered a £350 nightly rate. At 50% occupancy, that would produce £63,875 before costs. At 70%, the equivalent figure is £89,425. Those are clearly much bigger numbers, but they weren’t achieved annual results.
The higher rate was connected to improvements we were considering, including a games room and a hot tub. Those plans had to be funded and delivered. They could make the property more appealing, but they would also bring purchase, maintenance and operating costs.
This is where an investment spreadsheet can become a little too generous. It’s easy to increase the nightly rate because you plan to add something attractive, while forgetting to add the cost of providing and maintaining it. The income improvement and the expense belong in the same calculation.
I wouldn’t treat the £350 scenario as the natural next step simply because the property could be improved. I’d want to see whether comparable accommodation attracted bookings at that rate, how seasonal demand behaved and whether the extra work produced enough additional income to justify itself.
How much of the booking income might remain?
The management arrangement discussed in the video was around 25% of revenue. Booking platforms could take roughly another 12–15%, and I allowed around 10% for running costs. There was also an approximate annual local tax figure of £1,000 in the historical discussion.
These were broad planning numbers. They weren’t a fully reconciled set of accounts, and the precise basis of each charge matters. You need to know whether a percentage applies to accommodation revenue alone, whether cleaning is charged separately and which expenses are included in the manager’s service.
For an initial illustration, keeping about half the revenue would leave approximately £22,813 from the £250-a-night, 50%-occupancy scenario. Compared with £120,000 invested, that’s about 19%. At 70% occupancy and the same nightly rate, half the revenue would be around £31,938, or roughly 26.6%.
Those percentages are forecast illustrations before personal tax, the ownership split and any costs not captured by the rough allowance. They aren’t returns we had already earned. They also shouldn’t be read as a typical yield for French holiday homes.
I’d want a proper allowance for replacements and larger repairs alongside the regular bills. Furniture wears out, equipment breaks and buildings require work. If all the apparent surplus is taken out, the next expensive repair can make a supposedly profitable investment feel very different.
The management arrangement was central to the investment
Our local manager, Guy, was a major part of making the property workable. Owning accommodation in another country creates practical questions that don’t disappear because the purchase price looks attractive. Somebody has to deal with guests, problems and the property itself.
One of my concerns was what would happen if that person stopped managing it. In a rural location, there may not be an obvious replacement ready to take over on the same terms. The investment therefore depended partly on having the right local support.
That is a risk worth considering before committing money. A management fee can look expensive in isolation, but the alternative may involve time, travel, language difficulties and tasks you aren’t equipped to handle remotely. The useful question is what service you receive and whether the numbers still work after paying for it.
I’d also want clear records and responsibilities. Who authorises repairs? Who communicates with guests? Who checks the accommodation between stays? Who handles an urgent problem? Those questions affect both the guest experience and how much of your own time the investment consumes.
Ownership, currency and local rules all matter
This was a shared investment with my mum. The money and responsibilities weren’t all mine, and neither was the potential profit. A forecast for the whole property shouldn’t be presented as my personal income. The ownership arrangement needs to sit alongside the operating figures.
There was also a currency difference. Discussing the project in pounds made it easier for a UK audience to follow, but local costs and receipts can be in euros. Exchange rates can change what those amounts mean to an owner measuring their finances in sterling.
The regulatory position needs its own check. Holiday accommodation isn’t simply an ordinary home with a booking calendar attached. France’s official guidance on letting a second home as furnished tourist accommodation explains the relevant registration and local-authority considerations. Requirements can depend on the location and circumstances, so my 2021 experience doesn’t establish today’s permission for another property.
Tax treatment also needs to be considered in the countries relevant to the owner. The approximate local tax mentioned in my video wasn’t a complete statement of every tax a buyer might face. I wouldn’t use it as a substitute for advice on a particular ownership arrangement.
What I’d take from this case study
The attraction was a relatively modest purchase cost, the opportunity to improve the property and the prospect of useful income. The challenge was turning that prospect into a business that worked after costs, with dependable local management and enough cash for quieter periods.
I’d build the decision around the total money committed, realistic booking scenarios and the practical plan for running it. Then I’d test a lower rate, fewer bookings and a larger repair bill. If the investment only works at the most optimistic combination, I’d want to know that before buying.
That’s the same principle I use when developing a property investment plan: start with the result you need, then make sure the investment and the work involved fit that result.
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