What is the rental investment?
The rental investment can take different types of operations:
- Purchase of a residence house or apartment to rent to individuals
- Buying a commercial space to rent it to a company
What are the advantages of a rental investment?
The purpose of a rental investment can be varied:
- Create a complementary income
- Reduce taxes
- Simply to diversify your heritage.
Building a wealth funded by credit, without much financial effort, remains a major asset.
In fact, the rent collected generally covers all or part of the loan term. The possibility of an annual tax reduction also reduces the financial burden. Finally, very low interest rates drive up yields.
In the new, the Pinel law appears obvious. You can save up to 6,000 euros of tax per year for nine years for a real estate purchase capped at 300,000 euros.
How to make a success of your rental investment?
- Location: Location will be an essential factor. Indeed depending on the neighborhood you will not reach the same target of tenant: quiet neighborhood, rather family – active neighborhood, rather young students. Also if the property is close to public transport will be a key argument for future tenants.
- Look at the price per m²: The goal is not to buy too expensive your apartment, the rent must not exceed the monthly payment of your credit. Also ideally have a 20 percent margin between reimbursement of credit and touched rent. (eg € 1,200 credit refund with € 1,350 rent paid by tenants.)
- The goal: Is it financial? If so, Pinel should be considered a resale of the property at the end of the 9th realized tax savings this year. Is it to build a heritage and have a rent every month? In this case, you must keep the property in order to have monthly annuities.
- Think about the rental guarantee: This is an insurance that guarantees the payment of rent in case of default of the tenant. This insurance will replace the tenant in case of unpaid, and you still receive the rent it no longer pays. For this guarantee, count on average 2 to 3% of the amount of rents collected.
Can we make rental investment with an SCI?
You can create an SCI to manage your rental investment. It is even totally advisable to set up an SCI in the case of the facilitation of inheritance transmission.
Is it possible to make a rental investment without contribution?
Everything will depend on the borrower’s profile. It is even advisable, given the low real estate rates, to maximize the loan amount. Again everything depends on the desired investment logic by the buyer.