France's Leaseback Program: A Sure Thing?

France’s Leaseback Program: A Sure Thing?

Today's Financial News - Posted July 18, 2008

“When I first heard about this program and its guaranteed rental returns, I thought it was too good to be true. But when I researched the program, I saw that it made sense on paper…and conversations with purchasers confirmed that the program works in practice.” — Ronan McMahon

by Ronan McMahon

Baltimore — (TFN): In today’s investment markets, a sure thing is hard to come by. In 10 years of investing in and scouting non-U.S. real estate markets, I’ve discovered something that comes close just once. And the phone call I had with a contact in Paris last night convinced me that this strategy remains the closest you’ll get to a sure thing in the international real estate investing game.

Whenever a developer talks about guaranteed rental returns, I hear alarm bells. From Dubai to the Dominican Republic, real estate developers “guarantee” rental returns pushing double digits for periods up to four years. In the industry, it’s no secret how this works: You effectively pay upfront for the rent you will receive during the period of the rental guarantee. If you buy a unit expecting…or relying…on the same level of rental returns to continue at the end of the guarantee period, you will be sorely disappointed. The rental market for your unit will be limited.

But there is one exception: the French Leaseback Program. When I first heard about this program and its guaranteed rental returns, I thought it was too good to be true. But when I researched the program, I saw that it made sense on paper…and conversations with purchasers confirmed that the program works in practice. Read on to learn more.

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