HomeAndBusiness

For some, the idea of moving to France to live and to work is a dream. Specialist magazines are full of success stories about people who have taken the plunge. Jobs in the traditional French labour market may be hard to come by, but running your own business from your own home leaves you in control. With its network of broker partners, BestFrenchMortgage is ideally placed to put you in touch with the right lender for a property that is to be used as a business as well as a home. Do remember though that in France banks require borrowers to show a main source of income other than the rental income expected to accrue from the property being financed.

Choosing a suitable property

The first step towards opening a tourist business in France is to find a suitable property, well located to serve your target market. Many people prefer to start with a clean sheet and convert an old property such as a farm into a gîte complex. Others prefer to search for an existing business where the previous owners may have addressed the needs of the market they understood but they may have missed the obvious. For example, finding a failing small country town hotel where the owner had not realised the potential business that could be generated by the recently opened golf course.

Today, most guests want private bathroom facilities and few older French properties offer en-suite bathrooms with every bedroom. This is particularly the case with old hotels where you may need to halve the number of bedrooms to upgrade the accommodation to today’s standards. Sound insulation is also an important consideration and can make the difference between your business being recommended by word of mouth: or the contrary!

The facilities you offer will need to be matched to the duration of your guest's stay. If people are choosing your property as their main holiday destination, they may want a swimming pool or a BBQ area. If they are only staying for a few nights, they may still want a residents’ lounge or terrace, as well as their sleeping accommodation.

You will want a clear Business Plan, if only for your own peace of mind. This means you have to make sensible estimates of the costs, revenues, length of seasons and average spend to name but a few items. While everybody hopes to be at full capacity during peak season, it can be harder to attract guests out of season. Your business plan must show how your marketing effort will help fill empty weeks.

Running a gîte complex

A gîte complex is a collection of separate letting units gathered around a central foocus, such as a courtyard. Typically, the complex is a collection of agricultural workers’ cottages or refurbished farm buildings. Many people find that they have sufficient funds to buy the property, which is likely to be larger than average, and refurbish the first couple of buildings to start the cashflow rolling for the second stage. Unfortunately, this may mean that the early visitors feel that they are staying close to a building site, without the full facilities of the completed gîte complex.

Income from renting the gîtes must, of course, be declared. The taxable income will be net of business expenses, such as interest. Using a mortgage to buy and convert the first few letting units will help you to preserve your own cash until the rental income is well established. Under French law, early repayment penalties on French mortgages are limited to 3% of the outstanding capital, so you will be able to redeem your mortgage early when the business takes off: In many cases the BestFrenchMortgage broker partner will be able to negotiate the early repayment penalty out of the mortgage contract.

The likely cost of buying a gîte complex, or a location suitable for conversion, will vary according to the facilities to be offered (such as a pool), the quality of the accommodation (such as fully fitted kitchens and en-suite bathrooms) and the size of the property. These same factors will contribute to the future income stream, so a vision of your business will give the lender confidence to lend.

Sharing your home with Bed and Breakfast guests

Many people who move to France think that they can extend their income and meet travellers by turning part of their property into Bed and Breakfast accommodation. The French have long offered Chambres d’Hôtes, literally staying with your hosts. If you would like to extend this sort of hospitality, one important consideration, when choosing your property, is whether other people will want to stay there. Location speaks for itself: there are more B&B rooms near major tourist attractions than in the middle of nowhere. Facilities (such as en-suite bathrooms, home comforts, secure parking) are very important, particularly when people are travelling in strange parts.

These factors may also have a bearing on the price of the property you buy. A mortgage could make the difference between a house with a spare bedroom, which you could afford easily, and the possibility of buying a stunning property which people will visit, enjoy and recommend.

Provided that you do your research to determine the likely yield from running a B&B business in your French home first, there is every chance that your dream could well come true.

Whatever the mortgage question, the answer is BestFrenchMortgage