Hello everyone,
I would like to inquire about your experiences with https://lebijou.com
Would you recommend it as an investment option?
Thanks for sharing.
Hello Limust,
no, I would never look at it as a serious investment.
I went 5 minutes on their website and did not manage to find any usable information, everything what is shown is emotion driven.
I think that it is a wide problem today you find some financial products not under the control of the Finma and which are not true real estate products.
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It almost smells like Multi-level marketing, I would stay away from it if I were you. They even dare throwing the words “augmented intelligence” which is a 120 on the buzz word scale (what does that even mean ?).
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Thank you all for your advice. I truly appreciate it.
The question is: why would they offer a bond at an attractive rate when they could just borrow from banks at 1%? Probably because banks are not willing to lend them. And since they deal with real estate (banks favorite collateral), it begs the question: why are bank reluctant to lend them money?
My guess is that they are overleveraged already and that they are not profitable nor plan to do in the coming years…
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I agree with the above users’ comments. I myself was interested in their bond/ stock option at some point, and tried hard to find info but honestly couldn’t find anything useful. The “information” they provide doesn’t tell you anything about the investment itself. When they called me to discuss, I asked to view more data (eg annual report) but was basically dismissed by their staff. He sounded like it’s such a safe and sure investment that no further info is needed to make a decision.
That made me feel like their “investors” are probably amateurs who would just buy any investment product just because people say it’s great.
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bump up.
Some time later they seem to be well established. 5% corporate bond or “7-14% estimated”, 13.38% YTD returns on an ownership basis, about a dozen properties already in Zürich downtown.
I’ll try to attend their event next Wednesday and will let you know.
Apparently the returns and occupancy rates of previous years can be known under NDA.
The materials they present are very professional, but for my liking also way to emotional. I want to see the financial model, the occupancy, the upcoming projects, etc. Will report back 
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Similar sceptical comment from me as in the other thread: 5% is a higher rate than junk bonds. Listen to what they say but ask yourself why. If it as anything like similar property investments targeted at retail investors I assume you will be lending to a limited liability entity whose shareholders will invest your bond, if it works you both win, if it doesn’t you lose
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Isn’t that the same with all property investments?
if a REIT or immo fund is not successful you suddenly lose on the stock price.
Comparatively, if your direct property is unrented you sit on the monthly mortgage costs.
No risk, no return.
If you own property in your own name you own an underlying asset and you can control it directly.
For 5% return I doubt your bond will be secured against a property when mortgage rates are ~1%. And if it is secured against a property your loan is probably last in line behind other claims or perhaps the claimed value of the property is inflated. This is how many property investment schemes target wealthy retail investors. Disclaimer I do not know if this applies to Bijou, I am just flagging items you might want to check out
I would have similar questions investing in a REIT or any fund for that matter, always look at the track record and reputation of the fund manager and their motivation. For example ARK innovation tech fund- even if it crashes and investors lose their money, the fund manager can walk away with her management fees
Looked into them several years ago when they were first came out promising closer to 10% (so maybe my impression is dated; I think they finally engaged some real IB to raise funds rather than going full DYI back then, but still)
This is NOT a real estate investment at all. The business model is airbnb’ing of luxury apartments with an ipad-based “butler” twist. Everything was rented or owned by their friends. Balance sheet was largely made up of intellectual property (their ios app) and ipads. The former on its own is worth approximately $0 in liquidation (no matter what story they will tell you in prospects, how much it took to develop, you ain’t gonna sell it for much more than $0) and how much electronics depreciate on the swiss market anyone familiar with ricardo knows.
You’re giving the money to nobodies to fund their hospitality venture. The going rate for such deals is xx% equity, not a paltry interest backed by a fly by night gmbh with no real assets. I know times are tough and banks charge negative rates, but this is no excuse to lose your marbles.
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I know about valuation of IP, but thanks to point that out.
What I’m interested in is how their “Class A shares” work. The company is “airBNBing” out leased properties and all they own are the leasing contracts (which is a liability not an asset) and furniture and electronics (which are worth $0 to peanuts in liquidation). So a share in that company is not worth much UNLESS the business model works, what their current occupancy lists, etc are telling and how they pay out investors - you are also not buying MSFT stock (or AirBNB shares for that matter) to get a piece or Redmond property, but to benefit from their IP.
That might be a bit strong of an argument if you look at the founders. But yes, you are giving money “away” for a venture, where they should also have a skin in the game.
Let’s see.
For perspective here is how financing of these property investements is often structured in the UK. Disclaimer: I am not saying this is the case for Bijou nor whether the same applies in CH
The company gets an offer of finance from a bank for (say) 75% of the required investment as a mortgage or a business loan, depending on the case, and at a low interest rate.
The company needs to raise the remaining 25%. It does this by marketing to retail investors “guaranteeing” high rates of return and often uses 3rd party agencies to do the marketing (my spam folder is full of these emails and I often get cold called too). To comply with UK laws regards financial promotions the company needs to check that the investors are “sophisticated” or high net worth, this way the company directors can’t be sued personally for mis-selling and caveat emptor applies. These retail investors are always lower ranked than the banks and other creditors in the event of insolvency
The result is that the average cost of capital for the company is low. The owners behind the company have no or little of their own cash on the table. If the business plan works they get unlimited upside and become rich. If it fails they walk away
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Plus they failed a business, have a bad record at the bank/company registry, didn’t work anything else for the last 2-4 years, will probably get no income, etc… just because they might or might not have millions of own cash in there, it doesn’t mean they walk away unscathed.
So I went.
TLDR: fantastic company, terrible investment risk
Longer:
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they make money on airbnb-ing long-term-leased properties. Think 20-40 years on the lease. They renovate the whole thing to 5* (but very calm, Swiss standards) and rent top-location apartments with everything you could ever want as a service orderable on the iPad.
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their booking.com reviews are ecstatic (9.0+ in ZĂĽrich on booking.com), they started off with 3-4 flats, now managing 40+ properties in downtown ZĂĽrich alone, so the growth is huge. Luzern also growing.
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the apartments are rented for a ridiculous amount for top luxury clientele (think 20k+ a month) on a short but also a long-term basis (years), as well as used for events with catering, etc.
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the experience, the place, the tech is impeccable, I totally am sold why someone with a need for a little more privacy and too much money would want to do this.
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the financial model is tricky. The owners are at the top and they franchise the business model to an “owners’ club”. The owners club manages all properties in a given City (e.g. Zürich) and their share the risk/profit among properties. The OC also pays the franchise royalties. Founders have a relatively low stake in the OC’s (10% IIRC).
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the way you “invest” is you buy shares of the OC (an entity that doesn’t really have any assets other than furniture, but the liability to pay rents for a very long time as well as to pay the franchise royalties to the owners) and the gains are accounted for as “capital gains”, so they are basically tax free (caveat: I don’t think they actually pay this out, they just appreciate the share value for you).
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When you do want to sell, you sell at the nominal value of your original investment plus you get your “earnings” which at that point become taxable income (-> I can’t say I get the concept, pls someone correct me if this rings a bell for you).
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they said they didn’t go for a bank financing because then “the banks want a say in the company”, which is only partially true - yes if they would sell equity, no if they just need financing (I guess?).
Red flags:
- selling at nominal value means no compound interest. Makes a yearly 10-12% not so attractive anymore
- if the company went bust (which at this point seems highly unlikely) you are probably left with nothing as the OC doesn’t own any tangible assets
- the founders get their profit anyway in franchise royalties. If the business goes well they have unlimited upside (which is, correctly, shared up to 20% pa. at full occupancy), if the business goes bad the OC owners are taking the risk
- the shares are worthless in the traditional valuation way, you really are buying into the brand and are hoping for the best
Company Accounts can be looked at after an NDA. I’ll take a look but won’t report anything here, obviously.
All in all, a wonderful company I would really like to invest in, but the founders seem to have found a way to protect themselves and just get the money from “retail investors” instead of going the IPO way. Seems to work for them.
Oh and BTW: the Bond is just a corporate bond of a non-listed company. I wouldn’t be too worried about their ability to pay, but it’s not great returns (3-6%).
Any thoughts welcome.
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The biggest risk I see here is a regulation change such as in berlin where they stopped Airbnb for instance.
Well done doing your due diligence. It sounds like a great company for the owners
I doubt banks would give unsecured loans or take equity. Private equity would want a seat on the board and dictate how the money is invested and require a high return to compensate for their risk. Private investors are likely to be cheaper and much less troublesome for the owners to deal with
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Same here. I’ve asked for number they asked how much I want to invest and I said depends on the numbers. They have never been back
They are out for more than 4 years. I remember that it came to my attention some years ago