Domaine de Lavagnac

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.

Ronec

Why are you so vocal on something you are not investing in?

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!

Jezza

Your posts have been very clear to me from the beginning, but thanks for asking!

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!

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

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

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

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.

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

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

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!

Switching to 50/50 net rental

On resale or at any time during the 25 year term, the owner of the property can switch from the 7% of original purchase net return to the option of sharing “50% / 50%” of net revenue. This will ensure growth on resale values and enable owners to switch to proven market related rentals.

http://www.sapropertyinvestor.co.za/investments/domaine_de_l avagnac/docs/Brochure%20Domaine%20de%20Lavagnac.pdf

There is no clause in the Bail Commercial but by having such a clause in the contract which would come in effect directly with the management company, bypassing the lessee company of 7,500 euro capital, if contractual 'guaranteed' incomes fail to be paid would be sincere security. In a commercial contract, wouldn't a bank want access to an existing sub-lease to secure their money? Such a contractual covenant is less expensive than posting a bond or insurance as security. What would be the counter arguement?

Dubai-Nomad: It matters little who is managing if the lessee isn't paying. Unlike BTL, you are part of a group and can not rent independently; you will carry the costs until the Conseil Syndical finds a solution.

I have heard of project, St Thomas near Béziers, which the Cox brothers are involved in, unless I have been misinformed. It would be interesting to see if it has achieved viability after ten years. Anyone able to find information?

Mutley,

Spill the beans.....why are you being so coy? If you have hatched a plan to beat the crooks why not immortalise it by spreading the good word here.

Ronin

If only you knew and if only I could tell!

Mutley

Thank you for your constructive advice Mutley, although, if I decide to follow through, this will be my third leaseback project. I am not disgruntled nor disillusioned but I would point out that being the hunted would also eventually imply being the victim.

Six years to be in a money making position? Given your financial situation, I suggest you take your own advice.

If I have mis-stated myself, I humbly welcome anyone to correct me so that we may all profit.

Ronin

Based on what you have written above I would suggest you go away and do some more research before you enter into any leaseback.

I am now 6 years down the line from signing for my first leaseback and am now in a money making position for the first time. However it will take me another 3 years to get my losses back providing nothing else goes wrong. I also potentially have another 2 legal battles to get through. I have no capital growth and no original leases.

You have got to be the hunted rather than the hunter with the French legal system!

Mutley

Societe Generale is one of the oldest banks in <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />France. Most who are working through the broker representing the developer's interest, French Mortgage Direct, will be referred to this bank. They report that they also represent Credit Agricole and Caisse d’Epargne.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

IPIN Global agency is directing their clients to HSBC Bank.

While there is risk that the lessee may run into difficulties doesn't mean you are in the position to pay back the VAT. This is only applicable if you sell and even then, that is pro-rated. The difficulty lies in paying the mortgage while the copropriété syndic figures out how to handle the situation and find a new lease holder who will honor the 7% return. Here lies the overall risk. The solution is as I've mentioned before: security bond or insurance, which would be an added cost to the developer and therefore not expected, the third, which I can see no reason why such a covenant couldn't be afforded, is to offer the lessee's contract with the management company to the property owners in the case of default payments. If business is good, no cost, and no risk; if business goes bad, then the financially troubled lessee, Résidence de Lavagnac, is removed from the equation and all is preserved.

Myself, I'm bidding my time until the last moment before making a commitment. I thought someone on one of these forums would have more assuring and firm information countering the obvious risk inherent in this contract such as it's vagueness.

I have opposing information on this subject: A lawyer read in the inital draft that the rent in kind will consist in the right to occupy the property (either personally or for friends and family) while the Ms. Jeanty offers that only the owners will enjoy personal use.

The following bank is financing this development :

The bank Societe Generale http://www.societegenerale.com/

Anyone heard of this bank?

Not only you loose the rental income and will be left with an overpriced property. When Ronin says "It matters little who is managing if the lessee isn't paying... finds a solution" I think he forgot to add the fact that you will become liable to repay for the VAT to the French government. So don't forget to keep 20% in cash on your bank account...Pavel40303.4103703704

So basically what we are saying is if the lesse goes under, we loose the 7% income and would be lumbered with a over priced property.

What is the relationship between the lesse and the Address group? Are they the same thing?

Ronin,

Where have you seen the clause : 'At any time during the 25 years, the 7% return can be exchanged for a 50/50% split' could be invoked. (would this include unused personal weeks?).

is this all doom and gloom?

I understand that the 7% is only offered to a small number of properties and not to the whole development.

I also understand that the larger properties have been bought by investors - who are not expecting any sort of lease back from a management company.

For Phase 2 Domaine are only offering 5 (+/-)%, and all cost woudl have to be covered by the buyer. Speaking with Sam Winters he said 7% was only offered to stimulate offers and interest but this could not be continued with the rest of the phase.

Also remember that the management contract is with Address group who are one of the largest hotel groups in the UAE. Domaine will be there flag ship into Europe.

Here is a list of French property prices: http://www.french-property.com/news/french_property_market/c ity_property_prices_france_2010/

For lack of a proper comparison, it would be fair to select Montpellier at 2,500/m. (80m x 2,500 = 200,000)

A search engine can match you with a calulator for the present value of a 7% over 25 years. (25yrs, 7%, ~25,000/12, FV=0, PV=~48,000)

Here is a link to the latest French mortgages for leasebacks and others:

http://www.athenamortgages.com/French_Mortgage/Best_French_M ortgages.php

Don't forget to factor in the growth of interest over the two years of construction when calculating your payements.

Should the limited capital company holding the lease go broke, what is the security of income? There is no bond or insurance in place. The management has a lease with the holding company but not with owners. That sub-lease could be turned over to the owners for non-payment and the clause: 'At any time during the 25 years, the 7% return can be exchanged for a 50/50% split' could be invoked. (would this include unused personal weeks?).

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.

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,

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 .

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 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

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?

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.

Dubia!.Jim Moore,Give it a rest,i think you will get shafted.

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 ''

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 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

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!

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

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.

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 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 ...

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

No i am not a agent and i did not buy through your source by the sounds of it , my brother and i have bought through Lavagnac direct ?
sorry to mis-lead you ?

i CANT MAKE YOUR MIND UP , BUT GOOD LUCK , SINCE I READ YOUR NOTE IT SPURED ME ON AND AGREED A 3 BED SEMI ( MERLOT ) THIS AFTERNOON ON THE 50/50 DEAL HAVING A GLASS OF WINE TO CELEBRATE , THANKS FOR PUSHING MY DECISION GOOD LUCK WITH YOURS ,, webber ,,