French Property Lease backs

AndyT678

I have a mate who bought an newly built apartment in a French ski resort a few years ago. It turned out to have all manner of issues, everybody started suing each other and after years of hassle and stress he ended up being ordered by a French court to sell his flat back to the original developer at a substantial loss.

Not the same situation or model that you're looking at of course but don't imagine that investing all of your wealth in foreign holiday homes is an easy, risk free route to guaranteed riches.

dunstonh

I have only seen quite positive articles and reviews/comments so far

Anything from people that have chosen to exit from it? i.e. did they get their money back? Was it prompt?

A lot of the schemes with similar set up to this that go wrong use the capital coming in from new investors to fund the so called guarantee. So, in the early years, people will be positive as they are getting what they were told. Problems come later when the inflows slow down or stop or people want their money back.

jimjames

Iain-Le-Roi wrote: »

No, it isn't made up. I'm very early in the process and quite cautious so it is far from a done deal. I have only seen quite positive articles and reviews/comments so far so its good to get some balance to it and the above has really started to make me think twice about it.

I was hoping someone may have some first-hand experience too.
If there is anyone out there that does then I'd be really interested to hear it.

If you don't have much invested already why are you not filling up S&S ISAs instead? They're fully regulated and UK protected so far lower risk than this.

If you only have read things online and are not dealing directly with the end seller then you are risking far more. Unregulated investments may not even exist and income payments may be made from new investments made by others meaning it's unsustainable.

With the link you posted http://www.telegraph.co.uk/finance/property/expat-property/11532549/Expat-property-Buying-a-slice-of-Alpine-life-in-France.html are you buying for the full price like £180K? If not what proportion of it are you planning on getting? At least if you own the whole property you have a bit more security but for that money I'd prefer to buy a house in the UK.

Iain-Le-Roi

dunstonh wrote: »

Anything from people that have chosen to exit from it? i.e. did they get their money back? Was it prompt?

A lot of the schemes with similar set up to this that go wrong use the capital coming in from new investors to fund the so called guarantee. So, in the early years, people will be positive as they are getting what they were told. Problems come later when the inflows slow down or stop or people want their money back.

No, nothing. That's exactly the sort of experience I'm looking for really. Someone who has had one for 10 years or gone beyond the lease period, or needed to sell one mid-lease. I still think its an interesting proposition but stories like the above are very off-putting. If I do decide to proceed then one that is already built and in use would be a must with a reputable, established management company.

I certainly don't see this as a 'get rich' type investment. More something to keep for 20 years on a fixed mortgage and then use as part of a pension after its paid off in 20 years time. It would be along side BTL on home soil. Using it once per year as a holiday home is also a nice perk.

Cheers ILR

Mrs_Z

Hi, whilst I can not comment on this type of investment scheme in particular, I would urge you to consider the following:
- is there a boyant second hand market for this type of property if you suddenly needed/wanted to sell your investment? If not, you could be stuck with it for a very long time.
- whilst it would be nice to have a mgt company to do everything, they won't do it for free and not necessarily the way you want and when you want and at the level of expense you would. You hand over, possibly, a total control over to them and pay for it.
Also, how is your French?
And knowledge of the local property and other laws? Their system won't be the same as in UK. Not knowing the language will be a massive additional headache if you encounter problems that you need to sort out locally.


We bought a holiday property about 10 years ago in one of the sunny Mediterranean countries and whilst everything has gone well, and OH is a native speaker - I now find that a) we feel obliged to go & spend most of our holidays there rather than going somewhere else, b) the 'investment' value has not materialised whatsoever, we'd be lucky to be able to sell it at all, let alone what we've spent on it. Had we invested the same amount in a London property... it would have paid for our holidays many times over and then some.


In short, would I do it again? No I wouldn't. I would spend the money in a UK property instead.

Reaper

Iain-Le-Roi wrote: »

I would be looking at popular, snow sure ski areas, using large, established leaseback property companies that offer a lower yield but are slightly lower in risk as they have enormous portfolios and have been running for a lomng time...I would also look to use this property myself although only for around 1 week per year as the less you use it the greater your yield is.

I can see the attraction and would not dismiss it out of hand as many other posters would, but you do have to be cautious. Snow has become more unreliable in recent years, possibly due to climate change. So if you are buying I would stick to higher altitudes.

You could get a much better return buying your own property and renting it out. Not saying you should as it would be hard work with more potential for problems, but just be aware you will get much less yield when somebody does everything for you.

Also with a ski resort having a short season any time you use it yourself will have a significant impact on your returns.

Finally being a long term investment who knows what will happen over the next 20 years - maybe skiing will fall out of fashion or the market will be flooded with properties and supply far outstrips demand.

In the end you have to assess the risk and compare it to the yield to see if you think it is worth it. And it is not "low risk" whatever the companies tell you.

dealer_wins

This is a VERY high risk investment.

Personally I wouldnt consider it even for 1% of my total investments.

If its not regulated im not investing in it, simples!

atush

I don't have a substantial fund or share portfolio no, pretty small.

then no you cant afford this investment as you can lose it all. And you possibly cant afford alpine ski holidays either?

Build up a pension and S&S isa portfolio first. then play with buying property.

I say this as a home owner in france, and also have an investment portfolio and pension.

Reaper

dealer_wins wrote: »

This is a VERY high risk investment.
Personally I wouldnt consider it even for 1% of my total investments.
If its not regulated im not investing in it, simples!

I don't want to come across as a supporter as I would not invest in it but neither would I automatically exclude it.

For example you would probably be willing to buy shares in Centre Parks, in which case buying a leaseback cottage managed by them might not sound so outlandish.

jimjames

Reaper wrote: »

I don't want to come across as a supporter as I would not invest in it but neither would I automatically exclude it.

For example you would probably be willing to buy shares in Centre Parks, in which case buying a leaseback cottage managed by them might not sound so outlandish.

If it's vastly more money than any other more liquid investment the OP has (which sounds like it's the case) then I would still think it's a bad idea.

Obviously it depends on the company offering it but from a quick google it appears there may be less legitimate companies jumping on the bandwagon.

Iain - where did you hear about this and what exactly are they offering?