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“Le portage immobilier”: an ethical French real estate investment with high return
The concept of “le portage immobilier” offers a solid yield as properties are sold at a 20 to 30% discount.
A return of more than 6% with a tenant already in place that will take good care of the property: a real estate investor in 2016 could only dream about this. These days, it’s not totally impossible thanks to a new concept, “le portage immobilier”. This is exactly what StayHome.fr, a new crowd buying platform by the eponymous company, aims to offer. The idea is to allow homeowners in financial difficulty to temporarily sell their property to a buyer, while continuing to occupy the space for the price of rent. They thus become renters and will be able to eventually buy back their property once their financial difficulties have been overcome.
Of course, the investment is not risk-free, but StayHome, whose two founders are a real estate professional and a former banker, uses this expertise to limit these risks. First of all, they carefully examine seller profiles before offering them to investors. “Out of 100 profiles, we turn down between 70 and 80,” affirms Patrick Drack, one of the company’s cofounders. “We aren’t catering to owners in chronic debt, addicted to revolving credit. Additionally, the selected properties must meet certain criteria, particularly in all that concerns the stimulation the local real estate market. Finally, the tenants, once their debts are forgiven thanks to the selling of their home, must still be able to pay rent, which is fixed at market value.” The high return (6.5% on average) is achieved because these properties are sold at a 20 to 30% discount. “Over a five year period, the tenant has the right to buy back their property, the price of which is fixed at the cost price for the investor. For example, for a €100,000 property, the buyback price will be €113,000, which is the base price plus transfer taxes (about an 8%) and StayHomes’s cut (5%),” explains Patrick Drack.
A dissuasive clause
The tenants generally take great care of the property, as their goal is to own it once again someday. StayHome does not guarantee rental payments, but investors can sign up for an insurance plan. Most importantly, the tenant will no longer have the right to buy back the property after two months of nonpayment, a relatively dissuasive clause. “As of now, we’ve worked with about a hundred clients, and 85% of the indebted owners have bought back their property,” affirms Patrick Drack. Besides a good return, “le portage immobilier” gives investors “the satisfaction of helping someone who has been wronged by the financial system,” he concludes.