Paris, guaranteed rental investment

les_steaks

Hi, I saw and add in today's Irish Time's property section re. apartments in Paris with guaranteed rental income. The company involved are called springvale overseas. Emailed them and was told that:

To reserve a property a €400 admin fee plus vat at 21% is payable to Springvale and a 5% bank transfer to the French Notaire.

Studios are from €124,365, one beds €155,019 and two beds €249,844 fully furnished ex vat.

Stage payments are required throughout the building of the project – completion March 2008.

Rent is guaranteed by contract from DVS (management co.)

Rental yield is 5% of ex vat property price. French mortgage rates would be similar to those in Ireland.

Just wondering if anyone has any experience with this company or with similar. What are the pitfalls as it looks pretty good?

Cheers,

Les

BendiBus

A general observation. Guaranteed rental properties usually have this guarantee factored into the selling price. So you'd be paying more than the property is actually worth in order to get this type of guarantee. It's a safety net I suppose, but not necessarily a good deal.

7mountpleasant

Rental guarentee built into the price (nothing for free in this world) but whats worse you also get taxed at the top rate on the income from the rent so it is a bad deal usually.

onedmc

the other issues with the french buy to let residential market is that the security of tenure means that rent increases are capped so income growth is limited.

this then has a knock onto the capital appreciation

not an issue if you are happy with 5% forever

hmmm

What will you do if the company guaranteeing your rent disappears/folds?

Ponster

hmmm wrote:

What will you do if the company guaranteeing your rent disappears/folds?

Normally the property is sold on your behalf if you can't find another to take over.

les_steaks

les_steaks wrote:

Hi, I saw and add in today's Irish Time's property section re. apartments in Paris with guaranteed rental income. The company involved are called springvale overseas. Emailed them and was told that:

To reserve a property a €400 admin fee plus vat at 21% is payable to Springvale and a 5% bank transfer to the French Notaire.

Studios are from €124,365, one beds €155,019 and two beds €249,844 fully furnished ex vat.

Stage payments are required throughout the building of the project – completion March 2008.

Rent is guaranteed by contract from DVS (management co.)

Rental yield is 5% of ex vat property price. French mortgage rates would be similar to those in Ireland.

Just wondering if anyone has any experience with this company or with similar. What are the pitfalls as it looks pretty good?

Cheers,

Les

5% is a good return for france. The company looks like a new one so be a little bit wary, they dont have a proper website yet which isnt a good sign. I thought french VAT was 19.6% also. Check out the management company; if the company your buying off is new they could be too and thats when it could be an issue. Personally I wouldnt worry about most of the negatives mentioned below, guaranteed rent is the way to go for a cheap investment that you can forget about for a while if its the right deal

lomb

Not a great idea imho, unless u stick with a well known company. why do u want to buy in france?
if u really want to buy there i think central nice is a better bet as they arent too dear there. there are some very iffy areas in paris, and the center is incredibly dear.

damnyanks

Not sure how this would impact you as I don't know all the details. I'm told by every french person working abroad that the french government are laughin when you buy property as the tax rate is very high (You pay early tax on the flat / house)

Ponster

I bought a 300sq foot 1-bedroomed flat for €70,000 2 years ago and got it valued last month at €150,000. The value is expected to rise by 10% or so for the next 4-5 years.

There are no almost no dodgy areas in Paris but anywhere with a postcode of 75018 will be in one of the more 'ethnic' areas.

damnyanks

damnyanks wrote:

Not sure how this would impact you as I don't know all the details. I'm told by every french person working abroad that the french government are laughin when you buy property as the tax rate is very high (You pay early tax on the flat / house)

If you buy off the plans the tax and notary on top of the price is only 2.7%.
Capital gains is 33% when you sell but you are taxed on 5% less of your earnings each year you hold on to it.

RainyDay

Deleted User wrote:

Capital gains is 33% when you sell

And what about the Irish Revenue CGT for Irish tax residents, given that the Ireland/France double-taxation treaty doesn't cover CGT.

Good question, will have to look into that one