English
FrançaisThis is my first ever forum posting, so please excuse me if I am asking a previously asked/responded to question?
I'm interested in purchasing a ski leaseback property, but I am concerned about eventual re-sale? Has anyone got any experiences of purchasing a lease back, and then selling it a few years later. Has the capital value of the property appreciated? - A circa 4.0% yield would hardly seem worth it, if the property is subsequently difficult to sell on.
".....A lot of leasebacks will make very little capital growth. The only ones which will fare well at re-sale will be very well located and similar to classic properties in the locality. On top of that, if you sell it as a leaseback then it will not make a lot of capital.."
Seamus,
Could you elaborate a little on this please? If i am paying a bank 4% interest, and the rate of return on my leaseback is 4%, and if, as you say (and you are the guru!) a lot of leasebacks will make very little capital growth, then why bother with them in the first place? For example, why do you say "on top of that, if you sell it as a leaseback, then it will not make a lot of capital".
Merci
Sam
Seamus, Sam etc
I have done a lot of research on leaseback. I agree with seamus that the capital growth is not what they lead you to believe. If you buy an apt for 100,000 with a 4% annual return, gross rent in year 1 is 4000 euro. That will increase modestly on either an annual or tri annual basis in line with french construction index, if after 9 years this has risen to 5000 euro per annum the value of your leaseback peoperty if you want to sell it with a 4% gross return will be 125000 euro, remember if you dont sell it at this price you will have to compete with all the new leasebacks coming on stream offering 4% of the 2016 price. It seems to me the developers do better out of this than the leaseback purchasers. Capital growth on the normal freehold property is much greater. Even if your leaseback is in a great area and does appreciate who will buy it if when you do the sums and you end up with a 2% gross return for your would-be purchaser? I didn't think of this until after I purchased my leaseback.
I hope this point generates some large discussion and i really hope that someone actually does shoot holes in what i've said!!
Terrence
Hi
I'm about to go ahead with a leaseback purchase in the Alps and the agent has assured me that there is considerable capital growth and quoted examples of 146% snf 179% over six years. Should I be suspicious?
Jacki
Seamus
I was hoping you wouldn't agree with me!!! I am hoping that even if i cant sell mine as a normal property, i will make a decent enough amount after 9 years by selling it on as a leaseback given the fact that my gross rent pays 75% of my mortgage but not as much if i picked one that became a normal property. The problem with these is that sometimes they are not well located and a glut of them come on the market after 9 years at the same time. The perpetual leaseback properties are usually centrally located to amenities and thus one pays a premium for the price and gets a lesser return but i still think(hope) that it will give a higher return than a deposit account in a bank.
I'd really be interested in hearing from people who have renewed a lease or refused to renew a lease initially to get a better offer from the management company, despite lots of internet searches i cannot come across this, please help!!!
Seamus
Thanks for that, i'd be really interested in visiting sites en Francais who give this type of advice. My French isn't what it should be but its improving and i could get it translated by friends if it was invaluable advice in thus regard. If you have the URL for the French websites I'd be very grateful.
Terrence