Investing in a French Leaseback Property

[cs174]

Hi,

I've been thinking about investing in a French Leaseback property and was wondering if anyone on PH has done this and is able to advise the pro's and cons of such an investment.

Thanks in advance.

[matsmith]

I havent, but I have got an apartment in the south of France

I bought it a few years ago, and at the time I was talking to my estate agent about this leaseback thing as it sounded like too good to be true, rental yield of 6 or 7% guaranteed for 20 years, sounds fab

He told me that the downside that he sees with them is that in 20 years there will be a lot of identical properties competing for buyers, so while rental yield is very attractive capital growth might not be so when compared to a property in a non leaseback development, as I wasnt particularly interested in a monthly income this sealed it as not being one for me. I wanted good capital growth, thats assuming I ever decide to sell it ofcourse

There were some very attractive developments under the leaseback scheme though, but I dont think the locations were quite so good. What area of France are you considering?

[968CS]

We bought our place in the Vendee via the lease back scheme and it worked very well. The major advantage is the VAT relief on both the purchase and ongoing household costs

I'm not sure you'll will find any schemes that still offer guaranteed income ours wasn't and we bought it back in 2006, but I could be wrong.

The disadvantage is having to deal with the French managment companies who i'm sure are still doing business back in the 1980's with limited concept of modern technology, websites, emails returning calls......... very frustrating.

The French market is still quite slow so i'm sure there are bargins to be had.

Andy.

[cs174]

Thanks for the replies.

I'll keep an eye out for those still offering guaranteed returns and go through a UK-based leaseback specialist who will help in dealing with the French management companies.

I haven't decided on an area yet, probably either the French Alps or the South coast. Main consideration is return on investment, I'm not looking for personal use. Basically, I'm looking for one where you pay a reasonable deposit, rental income covers the mortgage repayments then at the end of term the property can be sold to help my pension/retirement.

Does sound too good to be true but the only risk I can see is that if the management company went bust I'd lose the guaranteed income and maintenance.

[influential]

One of my businesses specialises in promoting overseas property to the UK investor, and pretty much the only area that is still attracting interest is that of the French leaseback. VAT rebate at the outset, long-term (typically 18 years) guaranteed, index-linked rental income tied with some nice low interest rate loans can be what the risk-averse investor is often looking for. The key thing is the management company that's guaranteeing the income - stick with the #1 and you'll be fine, otherwise you'll end up signing a high-rate (5-6%) contract that falls apart after a few years.

PM me if you want a more detailed discussion.

[cs174]

influential said:

PM me if you want a more detailed discussion.

Thanks influential. YHM