How much to pay for a Gite Complex in France

Unless you have strong reason to be more optimistic, you could use the following as a starting point for an 'average' quality gite (ie not luxury but in good overall repair):

number of people the property sleeps * 10 weeks rental per year * 125 euros

A typical reason to be more optimistic is if the property is in a 'year around holiday' zone - such as some mountain areas or a very desirable area - some parts of Provence for example are rented at higher rents and for more weeks of the year.

You will hear of people who rent their properties out for 20 weeks a year or more. You might well achieve the same, but you might well not, especially in the early years, so it would be unsafe to assume it. Many properties are rented out for only 6 weeks a year, and yours could be one of them.

So for our three gites in the example above, sleeping a maximum of 16 people altogether, assume: 16 * 10 * 125 = 20,000 euros income per year. To adjust this figure, you now need to come up with convincing reasons why you could earn more or less, as mentioned above. If the three gites are all separated well, have a swimming pool and are attractive they could earn at least twice as much as three similar sized gites in a less attractive arrangement or setting. And if they are nice you will get returning visitors, and increase the number of weeks booked out each year.

You now need to convert this income figure into a price to pay for the gites. A good guideline would be that you shouldn't pay more than 10 times expected income. That is, you expect a 10% return on investment, before costs. Costs will take part of this, as will social security costs etc, so you will be left with perhaps 7-8% return on investment (net income / price paid). If you pay more, this % will be lower.

Again with our example above, let's assume it is very nice so we estimate income at 30,000 euros per year. So we wouldn't want to pay more than 300,000 euros. If we have valued the living accommodation at an additional 300,000 euros we will be happy to pay 600,000 euros altogether.

The reality

The reality is that while these figures give you a guide as to how much you should pay, they are no use when every gite complex you look at costs more than that. You will soon convince yourself to pay more when you see the property of your dreams, and all these sums will go out of the window. This is natural.

But the main point to bear in mind is that income can be estimated - by looking at how much similar properties charge, and subsequently monitoring them to see how booked up they get. All this information is easily available on the internet on sites that list availability. And you really do need a convincing reason to believe that you can do better than the others available.

So that's the bad news, what's the good news...READ MORE