Rental Investment: Everything You Need to Know!
Do you have investment projects, and are you thinking about rental investment? However, before you start you ask yourself questions and that’s normal! Investing in stone is a financial commitment that must be considered with caution! This is why we are going to answer all your questions: What are the advantages of investing in rental property? How to succeed in your rental investment? What is the rental return of a property? How to invest in rental property?
With our guide, you will have all the keys in hand to get started on your real estate project!
Why Invest in Rental Property?
Real estate investment remains the preferred investment of the French. Indeed, the acquisition of goods is always a safe bet. But why invest in rental property?
Of course, you are building up a lasting heritage. In addition, investing in real estate is sometimes more secure than financial products and it is often more interesting than savings products.
Real estate is in fact less affected by variations in the economic situation. There is therefore little risk that the property will lose its value.
But beyond the constitution of heritage, we are going to explain to you why buying a property and renting it has many advantages!
Real estate to prepare for retirement and receive additional income!
Indeed, given the economic situation, it is better to anticipate and build up your own retirement savings. Real estate is a good solution that will bring you additional income that will be welcome. Especially since if you have applied for a mortgage, it is often reimbursed when you retire.
A need for liquidity? You will always be able to resell it. In addition, if you hold the property for 30 years, you will be exempt from tax and social security contributions on any capital gain.
Invest in real estate to shelter your family!
Unfortunately, we are not immune to the vagaries of life. Real estate can therefore be an alternative pension solution. In addition, thanks to certain tax exemption schemes such as the Pinel law, for example, you can house your relatives on low incomes and benefit from a tax reduction.
Invest to reduce your taxes.
Indeed, in order to preserve the French real estate heritage or to develop new housing in so-called tense geographical areas, the State is implementing various tax exemption systems. So by investing in real estate you can optimize your income taxes while building up your assets!
We detail all this a little later!
Enjoy a profitable investment with limited risk!
A rental investment can actually be profitable, depending on several criteria. Go below to find out how the rental profitability of a property is calculated!
Thus, you can put the odds on your side by investing in a property, namely:
- Use the means of tax exemption available to you, such as the LMNP status (non-professional furnished rental company) for example.
- Investing with the help of a loan will be partly reimbursed by the rent.
Especially since thanks to unpaid rent insurance, you protect yourself from the vagaries of life and possible bad payers! Discover all the help to get started in rental investment, this will be the start of a successful investment.
How to Succeed in Your Rental Investment?
You have understood the advantages of rental investment. But to reap all the benefits, you have to take into consideration several criteria to succeed in your investment and avoid the pitfalls!
Follow us, we explain how to make your investment a success!
Find a quality property!
We can never repeat enough, that location is the criterion to be favored when buying real estate. Even if it’s for a rental investment, you have to put yourself in the tenant’s shoes!
Thus, to choose a property, you must check:
- The environment,
- local shops,
In addition to these characteristics, the property and the building are to be taken into account such as the floor, the layout, the surface, the general condition, and the quality of the construction. Think that a building or an apartment in poor condition will require a lot of work in the short or medium term!
To know the market prices in the geographical area of the property. You can consult the website notaires.fr. Indeed, notaries must transmit to the Superior Council of Notaries, the elements relating to a sale and in particular the price.
It is also necessary to find out about the rental market. You must invest in an area where housing demand is high. Dynamic sectors are to be favored to hope for a good return and to avoid rental vacancy.
One last piece of advice, with the entry into force of the new DPE (energy performance diagnosis), check that the property is classified A, B, C, or D. Indeed, housing classified below will be gradually prohibited from being rented if renovations are not carried out.
Anticipate your costs and keep room for maneuver
Another important point during a rental investment, you have to anticipate the charges and any work. You must always keep some leeway and cash flow so that you don’t find yourself in a sticky situation.
Indeed, let’s take a condominium building, you will have charges to pay to the trustee. Even if part of the building charges is recovered from the tenants, the rest is not recoverable, but tax deductible.
Thus, tell yourself that you will have to make a savings effort to pay the charges.
In addition, study the minutes of general meetings to find out about the estimated budget, the work planned, and any upgrades to standards… so as not to be surprised!
Then, as a landlord, you have obligations toward the tenant. You must familiarize yourself with the list of repairs and works that are your responsibility as the owner. You are not immune to heating failure, cumulus, or water damage… Also, it is essential that you can ensure these hazards, especially if you have financed this accommodation with the help of a home loan!
Finally, you will be liable for property tax, which can sometimes represent two months’ rent!
All these charges must be taken into account in your investment and your rental yield!