If you love skiing or the mountains, investing in a rental chalet can be a good way to combine pleasure with financial gain. But before you take the plunge, it’s important to define your objectives and fully understand the challenges, the tax and legal obligations, as well as how you can maximise your rental income.
In this article, we’ll give you all the keys to a successful investment in the mountains.
Defining your rental chalet investment objectives
Before you even consider buying a property, the first step to a successful investment is to define your objectives. Are you hoping to make a profit, amortise the cost of your chalet when you’re not using it, or simply cover your expenses?
We call these objectives profitability, occupancy and repayment. We define each of them, along with their advantages and disadvantages, in this article.
But there are other factors to consider, too. Do you want to create a property portfolio? Do you have a tax exemption objective? Is it important to you to create a place where all your family can get together during the holidays?
All these considerations influence the choice of property, as well as its location.
Tax and legal considerations when you invest in a chalet
It is important to choose the right legal status for your needs. Depending on the tax regime you choose, you may be able to benefit from certain tax deductions. This can be crucial to the profitability of your investment.
If you opt for the “real tax regime”, you can deduct the costs of your rental investment, including interest on the loan, from your income tax. Under the “micro-BIC scheme”, you can claim a flat-rate deduction of 50% before tax on your rental income.
We strongly recommend that you seek the advice of an accountant or property investment expert at an early stage, so that you can choose the option that will benefit you most.
In all cases, keep a close eye on regulatory changes: tax breaks, new laws applying to seasonal rentals, environmental laws, accessibility laws, local town planning schemes, etc. OVO Network partner owners receive an email explaining all the important changes.
Sale and leaseback
Buyers of a sale and leaseback property receive a 20% refund of the VAT payable on property purchases in France. In most cases, the developer will advance the 20% VAT charge to the buyer when the purchase is confirmed.
This means that the buyer does not pay the VAT normally due, which considerably reduces the purchase price. As a reminder, all property owners in France must pay “taxe foncière”, which is always charged to the purchaser.
Para-hotel tax
The “para-hotel” tax system also allows owners to reclaim the 20% VAT on construction costs, or on the new purchase price of a chalet or flat.
This system can be used when you have purchased a future property or a completed new building, when you are carrying out your own construction project or when you are undertaking major renovations on an existing property.
To understand the advantages, disadvantages and legal conditions associated with these two property investment systems, download our free guide by clicking on the link below.
How to choose the right chalet
There are several criteria to consider depending on your rental objective, but the most important are location and accessibility.
The location is crucial, as it will directly affect the experience of your guests, and will therefore also impact the success of your rental business. Do you want to offer a secluded stay in the heart of nature, or something close to the activities of a resort? Would you prefer a modern or traditional property, in a family-friendly or sporting resort?
The vast majority of ski resorts in France have good road and rail links, and are relatively close to international airports. However, it’s important to consider access to the chalet for guests who don’t want to use their car.
You should also consider the space and facilities you want to offer your guests (and yourself and your family if you plan to occupy the chalet occasionally).
How many people can stay in the chalet? Does it offer a wellness facility (sauna or hot tub, for example), or is there enough room to install one? Does your chalet offer facilities suitable for all seasons: fireplace/wood-burning stove, sunny terrace/garden, etc.?
Estimate the potential profitability of your chalet
Your potential income will be influenced by several criteria, such as your chalet’s location, its facilities, comfort and decoration, but also by the rates you charge. It’s important to be realistic about this, or you risk losing bookings.
We have set up an online calculator to help you estimate the potential profitability of your chalet. This uses the performance data of all our similar properties in terms of location, facilities and capacity, to provide a realistic estimate of your potential annual income.
A large number of short bookings throughout the year can have a significant impact on your income, provided you set the right price. Set a price that will encourage more bookings.
The tricky part here is finding the right balance. We have set up a proven pricing strategy to help you with that.
For example, a week in low season cannot be offered at the same price as in high season. Similarly, if your chalet has no outside facilities, your rates will have to be particularly competitive during the summer.
Predicting the profitability of your rental chalet means calculating the associated costs. Renovation work, charges, taxes, maintenance and cleaning costs… These expenses are specific to each chalet. That’s why you need to seek advice from accountants and local concierge services. OVO Network can connect you to trusted professionals.
Finally, bear in mind that your property will most likely increase in value over time. Although past performance is no guarantee of future returns, this has been the case in the French mountain resorts.
The below graphs, based on data from the website MeilleursAgents, notaries and the INSEE statistics bureau, show the evolution of property prices in several mountain resorts over the last 10 years.
La Clusaz
Méribel
Font Romeu
Super-Lioran
When to launch your chalet on the rental market
While you may be eager to open the doors to your chalet and start earning money from it, it’s essential not to rush the launch. Check that the property is ready to appeal to its target audience if you want to make sure you receive bookings year after year.
The first thing to do is to estimate when your chalet will be ready to receive its first guests. Any necessary work should be completed, the equipment and decoration finalised, and all legal obligations met. This is what we call “guest-ready”.
The winter season is the most lucrative, so it’s advisable to have your chalet ready by late autumn. However, summer now attracts many visitors, and a spring launch can serve as a practical test to ensure that your chalet is at its best.
From a marketing point of view, the date of the first photo shoot is crucial in the launch process. It’s worth noting that you’ll probably need two sessions to present your chalet in summer and in winter.
Finally, the first year of operation should be considered carefully in the financing plan. Your rental business will find its cruising speed after several months, once the summer and winter photos are online.
Balancing personal use and rental income
If you plan to stay in your rental chalet yourself, it’s important to find a balance that doesn’t affect your financial goals.
As a general rule, our partner properties generate around two-thirds of their income in winter. Your chalet will therefore be more profitable if it remains available to guests for the majority of this season, particularly during the winter holidays.
To give you an idea: a week’s rental during a period of high demand, such as the February school holidays, can earn you up to three times as much as a week’s rental out of season.
However, more and more people are travelling to the mountains outside the ski season, and some properties achieve over 70% occupancy over 12 months. Spread out over the year, these bookings allow you to maximise your income and be more flexible.
Finally, there are a number of points to bear in mind if your rental chalet is also your second home:
- removable bedding, which can be used for the family (such as mattresses or sofa beds), cannot be offered for hire;
- provide a space for storing your personal belongings;
- the entire chalet must be tidy and spotlessly clean before each booking. It may be useful to hire a property manager to ensure this.
Making your chalet more attractive to guests
Once you’ve acquired a property that you love and that meets your rental objectives, make sure it’s set up in the best possible way to satisfy your guests. After all, these days guests are not just looking for a place to stay, but a complete experience. That includes everything from decoration to comfort and facilities.
It is therefore crucial to make your property stand out from the rest by asking yourself: what would make people want to choose my chalet over another?
Pay attention to the decoration
Create a warm, relaxing decor – a space where you can really feel on holiday. Expectations are not the same in summer and winter: consider a change of decor according to the season. Think of things that set your chalet apart from the others, without overdoing it.
Add the facilities that guests are looking for
Offer some of the facilities that are most in demand: hot tub, swimming pool, sauna, ski room… As well as offering your guests a pleasant stay, these options mean your property will appear in the search results of online booking sites, and gain greater visibility.
Create spaces that will stand out in pictures
Add living spaces, such as a children’s playroom, a reading corner, outdoor facilities (like a pétanque court), teleworking offices or a bicycle repair area. Attractive photos of these areas will help potential guests imagine themselves in your chalet.
Offer additional services
Make a lasting impression by offering services that will enhance your guests’ stay and encourage them to return. This could be anything from discounts on local attractions to a paid in-home catering service or the provision of bicycles or snowshoes.
Listen to guests’ feedback
Your guests’ feedback can help you create a chalet that attracts bookings year after year. If you decide to work with OVO Network, we will send you a visit report on your property, which will include plenty of precise, personalised expert advice on how to make the most of this feedback.
OVO Network has nearly 15 years’ experience in mountain chalet rental. We work in partnership with over 140 owners, managing bookings, marketing, online payments and customer communications. We also help them find the best management solutions for their unique properties.
Do you have any questions or need some help? Don’t hesitate to make a telephone appointment with one of our rental specialists to discuss your investment project.
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