Leaseback Properties in France

This is a real estate investment opportunity that combines diversification, safety, tax advantages, inflation protection and asset protection-and doesn't require much capital to get started. Best of all, your income from this investment is actually guaranteed by the French government!

Through this program, you can purchase qualifying property in France free of value added tax (19.6% in France; so a US$100,000 property is discounted immediately to US $83,600). And you can take-out up to a 20 year mortgage for up to 95% of the purchase price at a fixed rate of interest of 6%. While leverage this high is commonplace in the USA, it's virtually unheard of in Europe.

France is one of the world's top tourist destinations, and receives more than 75 million international visitors each year...plus the French themselves typically prefer to vacation in France. Because there is a chronic shortage of short-term rental accommodations in France, the government offers a package of incentives to investors and developers of such projects.

Properties under this scheme run from US$50,000 for a studio in the Pyrenees to more than US$1 million for a villa on the French Riviera. And, since qualifying properties are in the most popular areas in the country--Paris, the Riviera and the Alps-they have excellent prospects for capital appreciation.

You own the property outright...but you agree to turn it over to a property management group for rental for a fixed number of years (typically nine). In return, you are guaranteed a net return after all management and operating expenses have been deducted. This return can vary from 4.5% to 6% depending on the development and the location.

These are real returns, indexed to construction costs. In other words, each year, as construction costs increase, your cash receipts increase as well. If construction inflation is 10%, your pay out will go up about 10%, too. Your return is evaluated each year. The worst case scenario is that you always get your original guaranteed return.

Depending on the project, you may have the right to use the property yourself for two to four weeks each year. But some developers don't allow owner use at all, so this is an important point to clarify up front. However, guaranteed returns generally go down the more weeks use you're allowed.

Asset protection? No one will try to sue you in France for your property. The French bureaucracy is difficult enough if you are French. Plus, although no one will know you own the property unless you tell them, for tax reasons you may wish to own the property through a corporation.

The biggest advantage of the Leaseback Program is how easy it is. The management company handles everything. All you have to do is designate the bank account where you want your rental income checks deposited.

After nine years, you can do what you want with the property; renegotiate with the management company for a higher pay out, rent the unit yourself, or sell the apartment. (Actually, you can sell the property before nine years have elapsed.but the new buyer is just subject to the remainder of the lease period.)

All in all, the French Leaseback is a virtually hassle free, almost no-risk investment--perfect, if you're making your first plunge into international real estate.

Contact our office to learn more about properties available under this program.

Special Note: French Property Insider subscribers may download your free copy of the Leaseback Report. (You will need your username and password to access the pdf document.) To become a subscriber of French Property Insider, click here.