Jul 052010
 
Paris Buildings

Leaseback for Investment?

Leaseback is the everyday term used to describe the ‘Residence de Tourisme’ scheme in France. This is essentially a scheme to increase the quality and quantity of tourist accommodation available across France. It has been seen to pop up in various guises in other countries such as Spain and Portugal, but it is essentially a French product.

Leaseback is often sold as an investment product, but it’s not really. It is a product that straddles the lifestyle and investment market. It is suitable for those who want to use the property for a period of time in the year but would also like some income to take the sting out of the expenses and debts associated with the property. In general it takes most of the first guaranteed rental period, up to 11.9 years, before the property actually ‘washes its face’ i.e. pays the bills without having to be supplemented from your own funds. The argument normally used is that it should be treated as a ‘pension policy’ where you put in a certain amount every year for a period and then prosper in later years.
Leaseback certainly has a place for some investors, particularly if they are prepared to put a value on their use of the property, although strong returns have become almost impossible to find as the value of French property has soared in recent years. It would certainly not make the kind of returns that a true investor would envisage.
Leasebacks are available from around €150k with loans available up to 95% LTV in some cases.

Leaseback is the everyday term used to describe the ‘Residence de Tourisme’ scheme in France. This is essentially a scheme to increase the quality and quantity of tourist accommodation available across France. It has been seen to pop up in various guises in other countries such as Spain and Portugal, but it is essentially a French product.
Leaseback is often sold as an investment product, but it’s not really. It is a product that straddles the lifestyle and investment market. It is suitable for those who want to use the property for a period of time in the year but would also like some income to take the sting out of the expenses and debts associated with the property. In general it takes most of the first guaranteed rental period, up to 11.9 years, before the property actually ‘washes its face’ i.e. pays the bills without having to be supplemented from your own funds. The argument normally used is that it should be treated as a ‘pension policy’ where you put in a certain amount every year for a period and then prosper in later years.
Leaseback certainly has a place for some investors, particularly if they are prepared to put a value on their use of the property, although strong returns have become almost impossible to find as the value of French property has soared in recent years. It would certainly not make the kind of returns that a true investor would envisage.
Leasebacks are available from around €150k with loans available up to 95% LTV in some cases.

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