Overseas investment - French leaseback

[Marie T]

I have 100K approx to invest and was thinking of doing so in the french leaseback scheme. Any recommendations, areas to avoid, pitfalls etc. All opinions valued as I'm a complete novice at this. Would i be better trying the stockmarket?

 

[ClubMan]

Re: Overseas investment

There are several threads on the specific topic of French leaseback scheme as well as similar schemes in other countries already on AAM which you should be able to find using the search facility.

 

[le francais]

I am living in france and have looked into this investment,my observations are
1 You really need to be aware of who owns & runs the complex during the initial 8/10 year period, it may be low income holiday rentals with substantial detoriation of the property
2 Tax, legal, and especially inheritance issues are not the same as in Ireland
3 There are substantial tax advantages for people with French income (similar to section 23 in ireland) however even with this advantage it is still considered high risk by people here

 

[heracles]

Does anybody know about french inheritance law. I want to purchase a leaseback property and leave it to my husband, however it seems that this is not possible under French law?

 

[bacchus]

I want to purchase a leaseback property and leave it to my husband, however it seems that this is not possible under French law?

leave it to you husband after your death? do you have children? what age?

 

[heracles]

Yes, I should have said I want to leave it to my husband after my death. I have three children.

 

[bacchus]

Under French law, the deceased (who only owns 50% of the property as married) can not leave his/her share in a property to the surviving spouse and nothing to the children. But this is protection so that the surviving spouse is not forced to sell by the children who are equally entitled to their share.
Have a read at this
http://www.onb-france.com/familia/index.php3?id_gmenu=3505&code_menu=liberalite&id_art=15112&langue=en

note: the quarter outright is i think one quarter of the 50% which is part of the inheritance, not 1/4 of the entire property.

 

[Propman]

Key questions for you re. French leaseback:
1. How much do you have to invest? €100k is a lot of equity; you could diverisfy into at least two properties, in different types of property investments or other countries to spread your risk.
2. Leverage. Much of propery investment is much about the bank's money. if you bought a French leaserback for €100k, you would be able to borrow on a non-recourse basis about 70% of the purchase price from a French bank. With a 5% rental yield, this should leave you in a cash neutral position on an annual basis but you will only have spent €30k and will have €70k to invest in other properties.
3. Time horizons. With a leaseback, you will (effectively) be tied to thew investment for the first 9/11 years. Leasebacks are notoriously illiquid, unlike a property with a shorter term tenant. So, if you might need your money quickly, or before 9/11 years, think again.
4. Attitude to Risk. A leaseback with a good national operator, in a good location, is not the riskiest investment. It should show relatively modest capital appreciation over the 9/11 year period but if you have chosen well, you will have no voids, no tenant hassles, and peace of mind.