English
FrançaisAnyone heard of this development?
I already own one near Cannes which Im very happy with and umming and arring about getting involved in this one.
On the face of it seems a good development in a 5 star resort near Montpellier and the deal seems to be too good to be true.
7% return guaranteed for 25 years (although not index linked). 4 weeks usage although 3 of those weeks in low season (although Im not too worried about use).
All maintenance, utility fees etc guaranteed to be paid in the returns.
Only 20k Euro deposit on a 359k Euro purchase price.
Management company seems to be very strong (The Address, owned by a massive Dubai based company with many other locations)
Just all seems a bit too good to be true, anyone else involved in this one?
I'm really interested in this development and am
proposing to visit the site within the next few weeks.
But to quote Jezza "the deal seems too good to be true"
and I can't help but have doubts. I've spoken to their
sales team direct and if you believe the hype then I can
see how the numbers stack up and they can afford to
guarantee a 7% return. BUT .... I suppose, as with any
investment, you have to accept the risk. The covenants
look pretty strong with the involvement of The Address
but I think there was some talk in these forums of Jim
(Buy-to-Let) Moore being involved. (Sorry can't work out
how to provide a link to the post but do a search for "OWN A £1MILLION HOME IN FRANCE-FOR NOTHING"). Does
anyone know if he still has an involvement in this
scheme?
lisa
Hi Lisa ,
i saw the article as well , when i was at the development , i met Barry cox who was mentioned in the article and is joint owner of the resort .
i asked him point blank is Jim moore involved in this project even in the back ground , and he answered back straight away absolutly NO he did meet him when there was a journalist was present , and Jim morre did mention to him that he could sell 30 or so property's for him quickly , he told me that nothing came of the meeting and they never heard back from moore again .
He sounded very sincere and i did not think about it again , i know that the first phase has been extended because of the amount of property that has been sold because i tried to buy a 2nd apartment on the top floor and at the old price of 375k they had all gone , i speak direct with the developers a sales guy called Jack , he has told me that at the end of September there might be around 7 or 8 top floor apartments available on a high point on the development with fantastic views priced at 399k , i have asked to be on the reservation list for one which he has said he will do .
enjoy your trip to the site , it is breathtaking especally if the sun is out .... good luck ...
Just to let you know i got my mortgage offer completed on monday and accepted 95% fixed at 4.8% for 25yrs , exactly what the developer was promoting , although this has taken longer than i first thought i can understand why with the property / finance world upside down , the facts are and this was direct from the lending Bank itself , Lavagnac is about the only development in Europe that is still getting 90 or even 95% mortgages passed , the reason is the first class structure they have behind the product , management / constructor / design / and the best bit realistic pricing of the property in todays market . i am told that the Act de Vente will take place within 4-5 weeks from now and that Vinci are confirmed as the constructor who are the worlds largest builder . the 7% deal has completly sold out months ago , and the only available deals are when someone fails on the mortgage and the property is then released back to a waiting list that the developer has , as i have a friend who would buy tomorrow on the 7% deal but is 5th on the list .
Webber
If I was to distill French leaseback into one sentence it would be....when something sounds to good to be true, it usually is.
Juan
Webber
I have to say I enjoyed the sentence "Lavagnac is about the only development in Europe that is still getting 90 or even 95% mortgages passed". It shows that you have a very poor knowledge of French Leaseback or believe without checking what you have been told (if you are not an agent indeed).
Good luck anyway
After much deliberation I decided to go for a 2 bed penthouse (No i am not an agent)
I have asked a lot of questions as I am a natural cynic, especially when something seems too good to be true but all have been answered satisfactorily.
The 7% return, apart from being on a limited number of properties as others have stated, can be offered as it is fixed and not linked to the construction index for regular reviews as other schemes are, hence in the long term their returns will be very good although in the early years they wont be making much, if anything.
I received an offer for 95% some time ago on a fixed 25 years mortgage, just less than 5%, and understand that the Acte de Vente will be sent out next week. Took much longer to sort out the life insurance as they insisted on medicals.
Everything so far has been very professional, they have top builders in (as others have mentioned) and also the best designers.
In relation to an observation Mutley made in a different thread. Jezza and Webber both joined this forum on the same day 22nd June 2009 and are both singing the praises of this development. Personally, I think this is a coincidence and the management company are very fortunate to have two unbiased and happy owners who decided to join here on the same day to give glowing comments about this development. I can't see how anyone could be suspicious!
Our opinion on this development is not positive at all in the sense that we do not have any reliable information on the developers, neither the management company, no financial account available at this stage.
Bertrand from C'est La Vie
JuanAzur
I can assure you I am not an agent and came on here in the first place so that I can see what others views are as I was, and am still to some extent, somewhat cynical at the promised return but have decided to take the punt.
This will be my second leaseback purchase, the first one has run very smoothly so maybe I am a little over-optimistic about this one too but I have asked a lot of questions (I am a lawyer so naturally cynical) but all have been answered satisfactorily.
Noel, what I am told at least is that the required occupation levels are no more optimistic than any other leaseback. The 7% is only on the initial phase of properties and this is constant for 25 years with no reviews so in the long term the management company should be in very good profit although not in the short term.
Also the 4 weeks they give you are all pretty lousy, 1 in high (not peak) season and 3 in low so they wont eat into their returns much. Given it is a 5 star resort they obviously anticipate pretty expensive rates and high returns.
I am not saying this is a good or bad investment, just that I decided to have a punt. Only time will tell if I was right like with any of these schemes.
Good morning,
As usual the questions should be:
-who is the legal entity paying the rent?
-what is his experience and financial means,
-what is the occupancy rate in year 1, 2 and 3
-did you get a P&L from years 1, 2 and 3,
-who are they targetting?
-what is the economic justification of the project?
-why most serious French bank like Credit Foncier decided to not finance such project?
Then you can make your decision.
Bertrand
Bertrand,
The lenders are Societe Generale, who I would have thought are one of the leading French bankers.
Jezza
You may consider yourself naturally cynical. However, when it comes to brass tax there is nothing cynical in your glowing praise of this development (or perhaps there is!!!!). I think I'll lean towards the comments of Bertrand and Noel on this one.
I would not touch this with a barge pole!! It is all based on theory and not on experience or past performance. If this forum shows one thing it is beware of deals that are too good -as the management company just goes bust and you are left to pick up the pieces. I was told they could make €3-4m in drink sales a year at their bar - I mean if that doesn't sound far-fetched!
It isnt a glowing praise, like I say I have decided to take a punt which may or not prove a good one. I am not suggesting to anyone else that they should or shouldnt invest, far from it, if anything I am trying to persuade myself! I came on here seeking the opinions of others which is after all what this forum is about and am glad it sparked a debate.
Hi there,
I have just heard from my mortgage broker that Domaine de Lavagnac is having serious issues at the moment in financing the project (and they now ask for 10% deposit instead of 20K). Guess we were right and it was even quicker to appear than expected.
Pavel
Jezza
Your last post does not make sense. Your praise of this development has
been posted AFTER you have you have signed and committed. Therefore how
could it be presented in the guise of 'trying to persuade' yourself. In
addition, your posts here do not seek the opinions of others but merely
sing the praises of this development.
I originally came on here to find out what others thought. I Googled leaseback forums and came up with this! Hence my first post asking if others were involved in an investment which seemed on the face of it 'too good to be true'. I was seeking others views on the downsides as I have understandably only been told the upsides from the agents.
I came back on to say I had decided to go for it and to share the responses I have had from the agents to seek others views, not trying to persuade anyone else.
As I say I DO NOT KNOW IF IT IS A GOOD OR BAD INVESTMENT, certainly don't take my word for it as I am sure no-one would!
Can I be any clearer?
Based on an appartment of 400k,the 7% yield is 28,000 euros.
Eurogroup stated last year that the distribution of holiday rental income was 20-30%,owner and 70-80% management company and in doing so refused to pay the agreed insee 3 year increase.
I can't see them getting a 90,000+euro holiday income on this property,so when reality kicks in,they will cut the "guaranteed" income paid to you.
regards
john
I do understand that some of you have had your fingers burnt with other developments. There are some shady deals and ones that might not live up to the promise. This development does look attractive for early investors, will it work, will it fail, I don't know. I can accept that its attractiveness can make it worth a gamble to some. I am tempted but too stretched with BTL's to get a French loan. Is it a gamble, of course. If you are negative towards all of these deals, I think you ought to explain why you think it might fail, and then let people make up their own minds.
Cheers
Ron
Jaward,
You made the right calculation, rent represents 40% max of the turnover so here they should get 70.000e minimum from a villa per year which is totally impossible in France due to climate and potential.
The max they could get is 10 weeks so max 35.000€.
Bertrand
Ronec
As a BTL investor,like me,you know if something is offering a exceptionally high yield there is a problem,dodgy area,poor condition or some other good reason!You pay your money and hope you can eliminate or improve the problem and get a good return.
With this leaseback,which is probably in a fantastic location,and very well built,you are relying on a management company,with whom you know very little about and you are relying on "salemans" promises.
Can they pull out after 3 years by giving you 6 months notice leaving you with a mortgage to pay with no income.
Nothing is certain,but with this high yield i think they will struggle to pay your "guaranteed" rent.
I think you are very lucky to have this forum to fall back on!
When i was looking over 10 years ago,there was nothing!
As we now know most were misold,mine certainly was.
I was told that the only bills was tax fonciere!
The co-op bills have been substantial over the past 6 years!
Eurogroup refused to pay the agreed INSEE 3 year increase!
On the Odalys development apparently if the other co-op owners dont pay(mostly French)we have to pick up the shortfall,its in the rules!
On the eurogroup development the swimming pool tiles cracked up after just 2 years(dont worry we have a 10 year new build "guarantee")again we got the bill for repairs!
It may be that with your personal entitlment,sitting on your terrace sipping a glass of wine everything will be fine,but i wouldn't bet against getting a whole lot of cr**p when you get home!
Jezza
Your posts have been very clear to me from the beginning, but thanks for asking!
I agree you have to be suspicious on high returns. If it seems too good to be true then it probably is. However, in this day and age when money is tight developers do need attractive returns to tempt early investors. I'm getting some really silly offers, guaranteed 9.25% a year for three years. Are all these investments good, I'm sure not. Will this one work, I don't know but it is tempting for a punt!
I agree, these sort of web facilities are great to air the ads and disadvs, and debate issues, but then let the punters do their own thing. It's not a crazy risk but does look at the high end so don't cry if you get burnt fingers. Go in with open eyes.
Best of luck if you decide to plunge. I would have done it if I was not too stretched!
Ronec
Why are you so vocal on something you are not investing in?
You're welcome Juan, glad you get it.
If you know about Leaseback and how it exactly works, there is NO WAY you can buy something like this.
Just ask yourself these simple questions:
- What experience does the management company has in terms of managing residences in France?
- How many residences do they have in order to secure the return they guarantee?
- Who will come via which TO?
Does anyone knows what happenned to the previous company that offered these kind of yields?
Just remember that a very nice site doesn't mean at all a good investment.
A Leaseback investment is only as good as the management company is making it.
Pavel
Be very suspicious about people pumping these sort of developments, especially two people who joined the forum on exactly the same day (220609) and then made ramping posts within two hours of each other.
These guys may be innocent but I smell a rat here. Will know more next week.
Mutley
The forum has gone very quiet which is strange as I'm told that at least 60 properties will exchange in the next six weeks. This is because the company have reached the government target of selling 60% of phase 1 before they can exchange and then start work on site. Are any of you guys about to exchange.
Although I've read general whynging I've not read any serious reasons for not investing in this project: "Too good to be true" doesn't count.
Yes there is a risk but a b... good return to compensate too.
Hi Ronec ,
You are right i have just been given my mortgage offer , it has taken longer than first thought , but the company have stuck to there word and produced a 90% mortgage for me , i dont understand the comments by others on this forum who are complaining the deposit is now 10% , just look what has happened in the financial world since this project was launched .
i spoke with a sales director on Thursday of this week from Lavagmac and found his answers to my questions as honest and straight forward as i have found them all the way along the mortgage process
i hope people like pave have pulled out as i would hate to be his neighbour listening to the whynging .
And i understand direct from Lavagnac sales team that they stoped selling the resort in early November to concentrate on getting the 240 sales through they already have , and start a new promotion in March this year which will be different from the early investor deal .
I also hear '' VINCI '' is going to be the Master builder ( the biggest construction company in the World ) ....
For me i am impreesed , '' Well done Lavagnac ''
Dubia!.Jim Moore,Give it a rest,i think you will get shafted.
Hi Webber
It's good to hear that progress is being made. The development seems to have slid a little but considering the general conditions it has gone remarkably well.
Are you still going for a 3 bed and a 2 bed, that does seem to be at the risk end of life.
The comment that said the success of lease back is dependant on the ability of of the management company rings true. The developers don't seem to have cut corners with either the builders or the management company.
I looked at it in Jan of Feb last year but decided 4 not very good weeks wasn't for me. As the project has gone so well I've just come back and am now thinking of it as a pure investment. Getting close to pushing the button. Will visit after skiing to nudge me over the edge or not.
Thanks for you response.
The two mortgages were a bit tough to get so went for 1 property a 3 Bed Merlot , The Agent who sold tried to seel me 2 properties has been taken off the list of Approved agents to seel the development because the Lavagnac team found them to pushy , so i ended up buying direct with them , and the mortgage advice from Sharon the Mortgage broker was first class , things are never 100% guaranteed in life , but at least i feel the Lavagnac team running the project are in for the long term and are genuine in the passion they have shown for the success of the Resort .
There are several famous sports people and actors that have bought and not once have they used this as a Marketting tool , which all the others cant wait to tell you about even when they have to give the property away .
Hi dubai_nomad,
Just to clarify: the escrow account is regarding your deposit that is hold on the notary account. There is no other escrow used afterward.
The management company doesn't have any other property in France, they mostly manage hotels in Dubai (and are good at this) but have no experience in this market and you might have noticed in the different posts of this blog that it was an issue for some people (including me who is used to French Leaseback and owns a couple of them).
Even if Golf de Lavagnac pays for communal charges, be aware that some will be at your charge (at least the Land tax and maybe a part of the co-ownership charges, TBC).
For the rest I think it's better to go through the different conversations from the beggining. I might not be the best person to comfort you in your purchase as in France a Leaseback investment is only as good as the management company is making it and it seems strange that this company offers return twice more important than anybody else (and we all know what happened to the companies who did the same in the past).
Regards,
Pavel
There are apparently more agents promoting this development than real investors on this chat, I think it becomes useless for people who are looking for honest answers to their concerns.
Don't worry Webber I won't be your neighbour but as I'm not selfish I'll let you benefit from the experience I have in property investment when you will begin to experience difficulties with this one.
PS: Vinci could be the biggest and richest in the world they are not the one that will guarantee your incomes.
Pavel
I agree. We have to be very careful about people coming on this forum and pushing developments, I think we all know what is actually happening.
If someone says something vaguely constructive, you guys say its an agent!! What nonsense. Is this forum only for whinging? I'm talking to Sharon about a mortgage but as I'm retired and running my own business, with some BTL's, I'm not sure I fit well enough into the French mould. She seems on the ball, we'll see.
I have to say Pavel and Juan Azar are saying what many of us have been thinking!
If you are retired and have a load of buy to lets you might find it tricky to get a French loan as your debt ratio may not be very good
Ronec
If you consider people who have been badly stung by mis-sold investments as whingers then you are talking nonsense. French leaseback does not do what it says on the tin and the hordes of people here with similar stories are testament to this. If you are a genuine investor then go and buy your leaseback. Don't tell us how wonderful everything is until you have actually experienced it over a number of years like the rest of us have.
I'm not saying it's wonderful JuanAzur, and I know all leaseback schemes don't work. Should we condemn all leasebacks because some/many have been oversold. What I'm saying is that the companies that the developers have involved have an excellent reputation in their own right. They have selected an area where the market does seem to be growing amd seem to be pulling together something that sounds a good gamble to me. With the returns they quote covering all the outgoing costs. Is the deposit at risk, yes of course it is. Is it a reasonable risk or should I keep getting 1/2% in the secure Irish bank? You pay your money and take your choice. I still think it's a reasonable punt!!
Ronec
I have paid my money and taken my choice. IF you do the same you will quickly find out how accurate your speculative comments actually are (rather than telling us how wonderful you THINK it will be).
Your location here suggests you are based in th UK and I don't know why you are quoting rates from Irish banks. If you want to look at the real rates for lump sum deposits in Irish banks then I suggest you look here:
http://www.itsyourmoney.ie/cs_group_lump_sum_deposit.htm
Thanks JuanAzur, yes i can get up to 3% with strings either in Ireland ot the UK.
What I was seeking was constructive suggestions about how to tell good from bad leasebacks. Are they all bad? Are all of them throwing your money away? I know BTL I don't know leaseback and was looking for a site that had a constructive debate. Look for these things, avoid these things...
I can get people that have invested in this venture and people who've burnt their fingers in others. Do i just avoid leaseback altogether, are there no successes??
Ronec
I don't say that Leaseback is a bad scheme on the contrary. I have 2 LB in my portfolio and believe it is a very interesting investment but as I experienced difficulties with one in the past I think it's important to share my experience.
I've made an enquiry few months ago for Lavagnac and have to say it was looking really attractive. Now that I know that this scheme is not based on the developer, the agent or the notary in France but by the management company I'm pretty sure Lavagnac is not secured for an investor.
Why do you think the other management companies in France offer no more than 4.5% to their investors if 6-7% was something possible?
My concerns have been confirmed by the property consultant I've been in touch with over the last couple of years and by my mortgage broker and this is the reason I'm on this blog today. Not to tell ppl "don't buy this development" but to share my thoughts and let them know that it looks like what I've seen falling in the past.
I think forums are a good idea for this type of development as it helps talk through the Grey areas of a investment of this type , my point was / is .
Who apart from me is talking direct with the developer and not a agent on these type of questions being asked ? as i have said in previous postings there is always risk in any investment and 7% is a high return , but if you ask the developer the right question , it all becomes very clear why they are offering this , i will give you my question to them and answer i got from Lavagnac direct on Monday 11th Jan 2010 .
Q; Please tell me why you are offering 7% and how can you see a way of paying this high return .
A; We have 663 units to sell over a 3 year build programme , the 7% is only offered on a LTD number of properties , it is NOT offered on the whole development , there is approx 150 Units that are planned for full time 52 weeks a year residence which has NO lease back on them , there are approx 120 large units that will have a profit share ONLY on them , and the new offer that is Launched in March 2010 will be very different to the early investor deal .
So you can see that the early investor has got a tremendous deal that is not repeated through the whole development and is on a very LTD number , the Address Hotel group is just amazing , i have stayed there 3 times on business now they are very professional and know what they are doing , so i am now in the deal and staying possitive with what i think is going to be the Rolls Royce of developments in the European Market .
This is the sort of debate I was looking for on forum.
What is good and what to look out for. Other peoples experiences are invaluable for this but they you need to understand what could go wrong and why. I have dealt with the developer directly and been impreesed with the clarity and sonsistancy of answers as webber says.
I'm not sure I understand what Pavel meant when he said:
Now that I know that this scheme is not based on the developer, the agent or the notary in France but by the management company I'm pretty sure Lavagnac is not secured for an investor.
I'd really like to understand this more as I've been worried where the developer of a LB also tried to run the management of the venture. I was happier when I knew the Lavagnac developer was using a well known builder and separate but professional management company. I have experience in BTL but not LB so happy to learn from others experiences and knowledge. If you could clarify this Pavel I'd appreciate it.
There is more to the quality of the leaseback than the management company. In the case of Lavagnac, it is not The Address who holds the lease and therefore not the company paying the 7%.
Here is a scenero: the unit is over-valued and the rents collected do not cover the overhead. The owners don't get paid for months while they figure out what's going on and eventually get organized as a single entity. They learn that the limited company holding their lease is going/gone under and the management company is still in operation and collecting it's fee. You can't collect from a bankrupt company. I know, I've been there.
I first heard of this opportunity in May 2009 and contacted the developer to sign on right away. BNP turned down financing of the project: "they have studied the financial situation of the property developer, the management company and the commercial lease with the expected rental income. Based on these details and the current property market, our legal department confirmed that we will not be able to finance it."
Today, I'm sitting on the reseravation contract as I seek out answers. For starters: What are the terms of the bank, besides the interest rate? Without a signed reservation contract, Sharon isn't talking. Will financing start when the project construction starts or when my unit is started? is the construction staged loan period at a lower rate as it is in Canada? Will payments start when the keys are handed over or when the period of rents commence?
These and many more questions. Find me on Facebook Lavagnac discussion as well.
Hi ,
I can not answer all your questions , but i am sure if the guy works for Lavagnac still who i spoke with he will answer all i found him excellent as i had sveral questions ( Sam Winter ) .
I have a mortgage approved and all ready to go , i am told that the act de vente will be late june on the first phase which i have my reservation in .
I got my mortgage through Sharon Hill who was excellent she is independent from the developer and was very professional , but if you have not signed a contract with the developer i guess she does not count you as a purchaser until then as i had no contact with her until i had all papers signed .
Your comment on the Address Operator was my big concern and you are right they are not the company paying you direct , however they are the company that is producing the income as they will as i understand it operate the whole project on a day to day basis and create income for the Management company , i questioned the devleloper on this several ways and they are very up front with the answer as i have explained what was said to me .
The mortgage is 100% rolled up during the construction period so NO payments are made during this period of building , and with my deal the developer is paying my life insurance payments during this period infact they are even paying them now as i have my policy in place already .
the 7% income starts when i get the hand over of the keys , but not before , i got my mortgage through Society Generale and with Sharons guidence was through in 2 weeks once i had signed all the apropiate papers which there is a lot .
If the developer gets the construction right the Resort is going to be amazing as i have stayed at the Address Hotels several times now and it is the best alround Hotel group we have found including Four Seasons .
A friend of ours has tried to buy a property on the 7% deal in the 2nd phase and has not been succesful as the developer is only offering this as quoted before on the 1st phase , he was told that the next deal has not been anounced yet but will be below the 1st phase deal .
I hope this has helped , i did say i would not reply to these Forums any more as they are always negative , however i thought your questions were relevent as they were very similar to what i had asked
Interesting i have just received details of a development in Pezenas by another developer where the prices are much higher than Lavagnac and does not have all the facilities ( check it out it is marketed by chestersons ?
Buying in a property market at the moment is always a risk , so if you havent made up your mind in 12 months you are probaly going to make the wrong one , you will drive yourself crazy with reasons not to buy as it has risk but we all know this when we enquire so i would pull out if i was you .
Hi Webber,
Buying a property at the moment is a risk? Well I would say you can avoid the risks by having a good advice and that's the all idea of a this forum. Just to clarify two tings:
1) a salesperson will always if he or she is good have an answer to your concerns but be sure they don't share your dreams. You think they care if the management company goes bankrupt afterward? I don;t think so as their commission will be paid at this time.
2) Societe Generale finances every development at the moment. If you want to make sure a develoment is a minimum reliable check if it has been agreed by the others. For you not to waste to much time I confirm you now that Lavagnac has been refused by most of the other French banks.
Regards,
Webber
Are we to be honoured with your cameo appearance and words of wisdom? This is not a negative forum, it is one based on honest experiences. Many people who post here have been stung by French crooks and get no protection from the French authorities. I must issue a warning to all potential leaseback investors... if you sign a lease you must abide by it but the management company don't have to. Furthermore when they decide to ignore it they will get the protection of the French legal system.
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