After the recent sale of the Cartier Building in Paris & wonderful profit (over 60% ??) made by BIAM for BOI Private clients, just wondering if this is a good idea or if things have changed dramatically since the last purchase. I'm seriously looking at it so all comments welcome. Yes, I do work for BOI & the word in my work is definitely to buy into this. I'd like some impartial advice though & some of you guys are the best I know at picking out the drawbacks http://www.independent.ie/business/...s-property-may-be-up-your-street-1049422.html
BOI Paris property Investment Fund
- Thread starter Perplexed
- Start date
I would think that things have changed dramatically since the Cartier building was purchased i.e. prices have risen 60% (or whatever was needed to generate the wonderful profit). In judging whether now is a good time to buy in you would want to look at the expected return on what you are buying into, and the costs and charges you will incur in doing that. You would do the same if you were buying a house - if you are thinking of buying into a large building in Paris then you probably need to do a lot more homework.
As for expected return, a yield of 4% seems low to me given you can get generally get more about that without incurring any costs or risk (e.g. deposit accounts).
As for costs, you should get detail on all of those. The first costs will be those incurred in buying the building. These probably come to about 20% of the amount you invest. So you are down 20% from day one.
The second set of costs will be the interest payable on the loans taken out to buy the building. With the ECB rate at 4%, then it's unlikely they are paying interest of less than 5%. I would certainly question borrowing at 5% to invest in something that only yields 4%.
The third set of costs are the charges. It is given as 0.7% of gross value. This probably means BOI are taking a charge of about 3% per annum from the amount you invest.
So, that's 20% down day one. You then are paying 3% in charges each year. You are investing in something that yields 4% but you are paying interest costs of 5%. What's missing? Well really all you are hoping for is a lot of capital appreciation to make up for all those costs&charges. Whether that will happen is anyone's guess. I would say something like this is high risk. Not for me!
If word in your work is definitely to buy this, then I would assess who is giving out that word and if they are also buying into it. If, on the other hand, they will only benefit if you buy it then it's difficult to take that as independent advice no more than you would trust any salesman telling you it's a great opportunity. But looking for independent advice is the right road to start off on.
As for expected return, a yield of 4% seems low to me given you can get generally get more about that without incurring any costs or risk (e.g. deposit accounts).
As for costs, you should get detail on all of those. The first costs will be those incurred in buying the building. These probably come to about 20% of the amount you invest. So you are down 20% from day one.
The second set of costs will be the interest payable on the loans taken out to buy the building. With the ECB rate at 4%, then it's unlikely they are paying interest of less than 5%. I would certainly question borrowing at 5% to invest in something that only yields 4%.
The third set of costs are the charges. It is given as 0.7% of gross value. This probably means BOI are taking a charge of about 3% per annum from the amount you invest.
So, that's 20% down day one. You then are paying 3% in charges each year. You are investing in something that yields 4% but you are paying interest costs of 5%. What's missing? Well really all you are hoping for is a lot of capital appreciation to make up for all those costs&charges. Whether that will happen is anyone's guess. I would say something like this is high risk. Not for me!
If word in your work is definitely to buy this, then I would assess who is giving out that word and if they are also buying into it. If, on the other hand, they will only benefit if you buy it then it's difficult to take that as independent advice no more than you would trust any salesman telling you it's a great opportunity. But looking for independent advice is the right road to start off on.
Armada,
Yes, that is the property I'm referring to.
You have to look at it as a 7yr investment - might be much shorter but you have to be prepared for the long haul as you've no control over when it will mature. If you have the funds sitting in a Savings a/c then it's a relatively painless way to invest in property in that all the work is done for you. No dealings with estate agents, banks etc in France & all the due diligence is done re the property.
The other thing that strikes me is the equity investment situation in this country at the moment is a bit on the shaky side. MY SSIP - which I left quite happily where it was - is down by about €800 in the last 2 wks. Not going to encash now till it goes up again but God knows when that will be....
I am buying an apt in Perpignan & I've come to the decision that it's enough investment for me in France at the moment. I might be sorry, but I think it would leave me too tight financially if I went for it.
Good luck whatever you decide
Yes, that is the property I'm referring to.
You have to look at it as a 7yr investment - might be much shorter but you have to be prepared for the long haul as you've no control over when it will mature. If you have the funds sitting in a Savings a/c then it's a relatively painless way to invest in property in that all the work is done for you. No dealings with estate agents, banks etc in France & all the due diligence is done re the property.
The other thing that strikes me is the equity investment situation in this country at the moment is a bit on the shaky side. MY SSIP - which I left quite happily where it was - is down by about €800 in the last 2 wks. Not going to encash now till it goes up again but God knows when that will be....
I am buying an apt in Perpignan & I've come to the decision that it's enough investment for me in France at the moment. I might be sorry, but I think it would leave me too tight financially if I went for it.
Good luck whatever you decide
Thanks for that Perplexed.
I, too have a BOI SSIP which has about 27k in it at the moment. I was half thinking of using this to part fund the Paris option.
The 7 + years is not a problem for me if I thought the investment was viable and had a good chance of offering a good return.
My thinking on this is that BOI are probably quite conservative investors and the fact that Paris is Paris that really it would be difficult imagining it going disastrously wrong. I am possibly been very naieve with this view.
I have invested here in property for the last few years but feel that door has closed now, so hence I am looking elsewhere.
Not sure if I am brave enough to go it alone overseas with so many conflicting opinions on Overseas locations... just looking for an "easy" option.
I, too have a BOI SSIP which has about 27k in it at the moment. I was half thinking of using this to part fund the Paris option.
The 7 + years is not a problem for me if I thought the investment was viable and had a good chance of offering a good return.
My thinking on this is that BOI are probably quite conservative investors and the fact that Paris is Paris that really it would be difficult imagining it going disastrously wrong. I am possibly been very naieve with this view.
I have invested here in property for the last few years but feel that door has closed now, so hence I am looking elsewhere.
Not sure if I am brave enough to go it alone overseas with so many conflicting opinions on Overseas locations... just looking for an "easy" option.
i have invested in 44 lisbonn paris with boi . i have a ongoing conplaint with boi. i have lost over 70% of my investement.i have tried to see if there was any one had the same investment. feed back from boi was very bad. i am a small invester an this investment should not have been offered to us. this has been going on too long advice by boi was very bad. reading from other messages it looks like boi is selling an buying it back to them selfs using other peoples money. i know there is no contact on this but mabey there might be a way.
Anthony
I too was an investor. I put in 400,000.00 EUROS AND I GOT BACK 125,000.00 EUROS. I have the case with my solicitor and he wants me to find other investors so that he can build a case for the ombudsman, So I would love to hear from you if you would email me at lizoconnor@aol,com
we could try and hopefully get some compensation, Also if you know other investors please pass on my email.
I too was an investor. I put in 400,000.00 EUROS AND I GOT BACK 125,000.00 EUROS. I have the case with my solicitor and he wants me to find other investors so that he can build a case for the ombudsman, So I would love to hear from you if you would email me at lizoconnor@aol,com
we could try and hopefully get some compensation, Also if you know other investors please pass on my email.
yes I do think I was misinformed about this policy. I have had my solicitor dealing with this case for the past year. He wants to get as many investors together as he feels he will have a stronger case with the ombudsman. if you could email me [email protected] and hopefully we will be able to get compensation.