The income seems low
Low compared with what?
Remember this is a NET return with no costs whatsoever to the owner (apart from a small annual property tax). Most buy to let investors who have purchased in the last year or so are lucky to be achieving any kind of yield at all after taking into account voids, repairs, refurbishments, insurance etc. The same applies to those who have bought foreign properties under the illusion they will easily rent them and make a worthwhile return. In most cases, owners are showing negative returns when all true costs are taken into accoun t.
Risk v Reward It is important to recognise the guarantee is only as strong as the company which makes it. Small leaseback companies offering higher guaranteed incomes for shorter periods usually have no track record and when the small print is examined do not actually fully guarantee their proposed incomes. There is also no guarantee they will be able to sustain those returns in the long term. Would you invest a lump sum of money with a company you had never heard of, with no track record, in the hope they would be around to provide you with a pension in 25 years time? P&V is a blue chip company, with an unequalled track record. So take your pick. Higher return with no guarantee, lower return but with a superb covenant behind it. This product is a piece of mind long-term investment, not a high-risk quick return product.
How do I know I can sell the property?
These are freehold properties and as such are subject to the same market forces as any other property (or indeed asset) you might buy. The difference between a P&V property and a buy to let or overseas property is that in the latter case, once the property is yours the company or person you bought it from has no interest in it whatsoever. P&V on the other hand, has a vested interest in maintaining both your property and the development as it makes most of its money from letting properties. It has established its reputation since 1967 as Europe's leading provider of self-catering holiday accommodation. As such, 6.6 million holidaymakers will stay in P&V properties every year. This gives you a guaranteed potential supply of purchasers as P&V has a well-established resale division, which will market your property to those holidaymakers. Traditionally, most buyers have been happy customers of P&V and have stayed at the resort where they decide to buy. Out of P&V's approximately 58,000 properties, there are currently less than 150 properties for resale.
Capital growth is lower in Europe ?
This may have been the case in the past, however in recent years many European countries, France included, have experienced impressive capital growth. For example the average annual house price increase in France in 2004 was an impressive 17-18%. However, it is important to remember capital growth cannot be guaranteed with any property, leaseback or not and past performance is no guide to the future. The major advantage of this product is the guaranteed income, which is not the case with ‘conventional' property investment. This guaranteed income provides an ‘underpin' to the property value as any asset with a guaranteed income must have a consequent capital value, which will vary depending on interest rates generally. There is no other investment, which can provide this kind of reassurance.
How do I know P&V will take care of the property?
It's important to understand P&V has as much, or even more, of an interest in the quality and condition of the property than the purchaser. This is because P&V's main income is tourism, the P&V group deriving by far the majority of its income from the letting of its leased stock of properties. Therefore in order to maintain its income through reputation, repeat visits and its position at the top of the holiday market, it must maintain high standards for both the property and its developments.
In addition, the legally binding lease which P&V signs, contractually requires them to maintain, insure, clean and refurbish the property, so it is returned to you in much the same state as you bought it. |
