Why Investment in a French Leaseback Property
May 14, 2010
Investing in homes abroad can be an excellent method to generate financial freedom.
But before parting with your cash, an investment strategy should be created.
Where should you invest your money?
What risks are you willing to take?
A lot of emerging property locations, which were so popular during the height of the global property boom, are now out of favour with many property investors, due to the high-risk, high-return, boom-bust nature of investing in these kind of markets.
A lot of investors have now returned to buying property in safer traditional markets, where the economy has more history and strength and the risks are far lower.
Take France for example.
The global credit crunch had a lesser impact on the country’s economy, ensuring that it was the first European nation to break out of last years recession.
The French buy-to-let market, particularly the French leaseback, is reportedly attracting particular interest from global investors, due to the low-risk, hands-off, nature of this long-term French property investment vehicle.
France Leaseback Properties
The French sale-and-leaseback (propriete allege) system was launched by the French government in the 80’s to increase the number of vacation homes available in the country.
This investment vehicle provides you with an opportunity to buy a home and then lease it back to a management company, often for a typical time period of nine to eleven years (extendable up to 18 years) in return for a rental guarantee of 3% – 6%.
Through out the leaseback period, the management company will let your property, as well as furnishing, maintenance and paying all bills. Meanwhile, homeowners get to benefit from a guaranteed rental income and potential capital growth throughout the duration of the leaseback agreement.
There is an added incentive that most leaseback properties in France qualify for a 19.6% VAT rebate from the government in France.
A Stable Investment
For people seeking a France investment property the idea of a guaranteed rental income, good long-term capital growth, VAT exemption and a traditional mature market, offers little doubt that leaseback properties in France look a safe bet for investors.
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