I have been out and about looking for properties for my new Puglia property investment fund (see previous newsletter for details). I have also had some requests for properties similar to Palazzo Cairney, so was killing two birds with one stone.. Although I eventually want to expand the fund to include countryside properties with pools, the first couple of properties will be town based for a number of reasons. I need properties that are quick and easy to restore and which can be ready to rent as holiday lets within 9 months at most, ideally less, in order to guarantee a return for investors.
Due diligence for country properties is more complicated and takes longer. You are more likely to have nasty surprises as well (neighbours exercising right to buy, rights of way, planning for pool etc). Countryside properties in need of restoration usually need a new septic tank to meet current regs and a new water supply, both time consuming and expensive. Without a pool they won’t rent out, again more time and expense. The holiday season is also much shorter, unless the property has some services within walking distance, which is unusual, and unless there is an open fire. Once the property is renovated, servicing holiday lets is more expensive as staff need to travel to the property.
So town properties it was, at least to start off with. I looked in Nardò and nearby Galatone because we are already looking after properties in those towns, giving us economy of scale, and prices are still good. Both are close to beaches and Brindisi airport and there is plenty to do and see year round,
I am including one which I would include in the property fund at this stage, and also ones which I liked (and may interest someone else) but which, for reasons I will explain, I wouldn’t include.
I am leaving out two which I am definitely including in the fund as, earlier in the year, I had the extraordinary experience of being gazumped by a ‘friend’ who I had told about my potential first property in the fund. So convincing were my arguments about why it was a good buy that she actually swooped in and bought it herself in the very short period of time when our mandate expired and before it was renewed. Hell, as they say, is other people!!!!
Bear in mind that it is normal for Italian owners to put properties on the market full of random junk and stuffed to the gills with granny’s oversized vintage furniture. These were all fixer uppers and needed work – all were structurally sound though, with lots of potential.
Property 1 (pictures above) is in the historic centre of Nardò. It has 70 sqm internal space, two good sized rooms, kitchenette and bathroom on the ground floor and a further large room on the top floor with a panoramic roof terrace above. The asking price is 70,000 ono. I liked this one for the vaulted ceilings on the ground floor and the flat roof above one of the ground floor rooms which could make a further terrace connecting to the first floor room. One of the ground floor rooms has the original floor and the roof terrace has good views. I ruled it out for the property fund, at this stage, because it has great potential but needs quite a lot of work. I would actually make the ground floor the bedroom area, take away the kitchenette and take down the non load bearing wall which separates one of the bedrooms from the kitchenette which currently spoils the curve of the vaulted ceiling. I would then make the large room on the first floor a kitchen/livingroom and open up a door onto the adjacent flat roof (which would need a balustrade adding) to create an outdoors dining space off the kitchen, The flat roof needs repointing as well. It could be a lovely little house but not for me at the moment.
I would definitely include Property 2 (above this) in the investment fund, but not as one of the first two properties as it is large and needs quite a lot of work. It could provide 3 bedrooms and 3 bathrooms with a very large kitchen/livingroom, arranged over 120 sqm with a roof terrace. There is also a 25sqm semi basement. Next door in a separate property there are a further 3 rooms and cellar at 50,000 which could be made interconnecting. This property could be made stunning, and ticks the boxes for those who wanted something similar to Palazzo Cairney (albeit it smaller if you didn’t add the next door property). An interesting quirk of these properties is that they were built where part of the old town wall had been knocked down, so the front entrance is on a wide tree lined road with shops,and the back entrance is in the historic centre. The asking price is 130,000, which I think should come down a bit, but it does need about the same again spending on it to make it top notch. Great rental potential though and also good for resale.
Property 3 is a good buy at 90,000, recently restored, with good finishes. It is not in the historic centre, but just outside. There is a roof terrace, but currently no access to it, which one would want to resolve. The accommodation consists of a living room, large kitchen/dining room, two bedrooms, one with a balcony and two bathrooms. This one doesn’t interest me for the fund at the moment, you make a better return on properties to restore as restoring normally adds around 20,000 to the value of the property over and above the cost of the work. If it were early spring, and other properties rented out then it may be interesting as it could be ready to rent quickly.
I am completely in love with property 4, and would buy it for myself like a shot, were it not for the fact that it needs a lot of work and, knowing me, I would be so busy restoring houses for other people I wouldn’t get round to it. This one costs 95,000 (though it probably needs 200,000 spending on it) and is in Galatone. Built at the turn of the century it has all the original floors, the original range in the kitchen and each room has a different kind of vaulted ceiling. The cellar has a stone vaulted ceiling and still has huge wooden wine casks in it. The grand, original entrance, leads to another stone vaulted room once used as stables, now as a garage. There is a roof terrace and also a small courtyard at ground level, off the kitchen. Very beautiful and flooded with light this would provide 3 bedrooms and bathrooms and maybe even a pool in the old wine cellar!. Not right for the fund at the moment as it wouldn’t be ready to rent out in the first year.