What is a leaseback?
We’ve been scouting for a discounted French leaseback deal for the last six months. These are as prized as they are rare, because the French local investment market is so strong and finance so readily available that developers have no need to discount to sell. But we persevered. It was an old acquaintance from Jonty’s short career in France as a goat-herder (don’t ask) who finally led us to this deal. And what a deal it is. Word of a Parisian, Best Western-branded apart-hotel with a 14% discount, a guaranteed 5.09% net rental yield, VAT cashback, excellent leveraging and low entry deposits saw us embarking on the very next Eurostar to Paris. Meeting the developer, we immediately snapped up 55 of the 120 units for you – from under the very nose of a French competitor – and negotiated hard to secure a limited-time price 14% below their list prices. To further exasperate our competitor, we even brokered five days per annum free usage for the first three years you own the unit, ideal for f
‘Leaseback Property’ is a real estate scenario where a freehold property is “leased back” to a Property Management Company, for a fixed tenure, which in turn, manages or commercially exploits it without interfering with its ownership. Normally, the Company lets the premises on rent and gives certain percentage of rental income to the actual owner. What is French Leaseback Property? ‘ Loué Meublé Non-Professionel (LMNP) or the French Leaseback Property System was introduced by the French government in early 1980s to increase the quantity of holiday accommodation available in the country. This was a measure to offset the growth of required holiday accommodation sites in the country, as a result of burgeoning tourism industry in the country. Under the LMNP, the investors who purchased the property had to lease it back to a pre-determined Property Management Company for a fixed period of time (generally, between 9 to 11 years, extendable up to 18 years). During this period, the task of the
A leaseback is very simple really. Sometimes known as a sale/leaseback or sale and leaseback, it is a transaction wherein the owner of a property sells that property and then leases it back from the buyer. The purpose of the leaseback is to free up the original owner’s capital while allowing the owner to retain possession and use of the property. The type of property involved can be anything from residential or commercial real estate to equipment or vehicles. A leaseback can be beneficial for the buyer and seller alike. The seller attains a lump sum of cash quickly and the buyer acquires a lower than market value purchase price, along with a long-term lease at a premium rate. The lease amount provides periodic income and may even be enough to pay the buyer’s mortgage, if he or she borrowed money to obtain the property. A leaseback can be a great investment tool, one that yields a high return. As with any investment, however, there are associated risks. Some leaseback arrangements allow
‘Leaseback Property’ is a real estate scenario where a freehold property is “leased back” to a Property Management Company, for a fixed tenure, which in turn, manages or commercially exploits it without interfering with its ownership. Normally, the Company lets the premises on rent and gives certain percentage of rental income to the actual owner. What is French Leaseback Property? ‘ Loue Meuble Non-Professionel (LMNP) or the French Leaseback Property System was introduced by the French government in early 1980s to increase the quantity of holiday accommodation available in the country. This was a measure to offset the growth of required holiday accommodation sites in the country, as a result of burgeoning tourism industry in the country. Under the LMNP, the investors who purchased the property had to lease it back to a pre-determined Property Management Company for a fixed period of time (generally, between 9 to 11 years, extendable up to 18 years). During this period, the task of the
