The whole leaseback issue in France is overrated; the concept is a good one, but to be honest much of what is out there at this stage of the market isn´t great, at best. People who got into this early on have done well, but once it became popular with foreigners the developers squeezed it for all it was worth, to the extent that we are now seeing the dregs. I wouldn´t buy any of what I now see for sale in the French Leaseback sector. In particular, I would run a mile from a lot of the Parisian stuff, which often consists of expensive hotel suites with a lot of burdens on title.
The first thing to remember about this product is that is can never give you a windfall profit. Never. The price is essentially a multiple of the lease sum, i.e. the product gives a 4% or 5% return or whatever, and the price is a multiple of this, i.e. 20 or 25 times the lease sum. The lease is typically linked to an index, so that at best the selling price will also be linked to this index, and can not outperform it. So any hope you have of benefiting from location, local potential etc. is not a runner. If all goes well, your property will inch forward in parallel with the index.
Of course that assumes that there isn´t a glut of properties in the market when you go to sell. As all the leases start from the same time, and all owners are tied in for the same period, then all the properties will come back on the market at the same time. Supply/demand?
Nobody tells you about issues with common areas, but these are a big part of the negatives around leasebacks. If a swimming pool has to be refurbished, or new carparks or other facilities provided, who pays?
Many of the leaseback properties will need to be completely made over at the end of the lease period. The leases are usually "full repairing", but this doesn´t include bringing up to date. In addition, hotel operators will work these properties to the limit, and the wear and tear on them has to be seen to be believed. You would need to look at properties managed for several years by the proposed operator before you make up your mind to effectively go into business with them.
All leasebacks in my experience are priced at a premium on the local market, usually between 20 and 40 percent on equivalent sq meterage. This is a sum that has to be discounted when selling, as the market won´t stand such a premium at that stage. When you take this into account, you will find that your 4% annual return is suddenly quite small.
Be very careful of so-called "aparthotels", essentially you are buying a hotel room which the lessor operates as part of a hotel. Almost all of these have a clause that forces you to offer it to the hotelier at "market price" when you come to sell. The problems arise with determination of "market price". Many other ordinary leasebacks also have exit clauses that force you to offer the property to the developer or hotelier, and "market price" can be 20% below what you would get for a similar unburdened property locally.
The big issue with these projects is the inability to make windfall gains though; all the other issues are more or less of a problem depending on the development. The main thing to remember is that you need to look beyond the information provided by salesmen and do the math vis a vis the local situation. As with anywhere!
Previous poster is correct in saying that these products are the only true guaranteed rental product out there, but the margins are questionable. Buyer beware!