Do you want to invest in property? Before making any purchase, it's essential to estimate the profitability of the operation. The calculation is simple: you need to recover more money than you spend. Here are 4 tips for a successful property investment.
Buy at the right price
Buying a property at a very affordable price per square metre is not necessarily a good idea. This attractive price may reflect a lack of appeal for the area or for the property itself (inadequate insulation, dilapidation, etc.). Don't forget that your return on investment depends not just on the purchase price, but also on the rents you receive. If there are no takers for the property and/or you are forced to lower the rent, the benefits of the low purchase price will quickly be wiped out.
On the other hand, buying a property at a high price in the hope of renting it out at a very high rate is not a good idea. This type of property is aimed at a much smaller target group. If you are too greedy, you could end up with no tenants, no income, and therefore no return. The basis of a successful rental investment is therefore to find a property at a price close to those prevailing on the market - ideally slightly below. So you need to know what the market is like at the time you want to invest. If the property needs to be brought up to date, ask for quotes to estimate the overall cost of the work and add this sum to the purchase price.
Estimating the rental value of the property
Like the purchase price, the rental value of the property is decisive in ensuring a good return. To estimate this, compare the property you are interested in with other similar properties. Find out what rents are charged for comparable properties, taking a number of factors into account:
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Geographical location ;
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Type of property (studio, flat, house with 2, 3 or 4 fronts, etc.);
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Surface area ;
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The number of rooms;
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Year of construction and general condition;
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Finishes (materials used, fittings, etc.);
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whether there are any outside areas (balcony, terrace, garden, etc.).
Have you set your sights on a major French city? Find out more about rent controls. Rent controls apply to so-called "tense" urban areas with a population of over 50,000. Initially limited to Paris, it has gradually been extended to other cities. If you are investing in a property in one of these areas, you will have to base your rent on the rent reference index (IRL).
If you are planning to invest in a flat, don't forget to deduct any works planned by the co-ownership from the rent you receive. When you visit, don't just look at the condition of the property. Examine the communal areas too. Boilers, lifts, roofs... If any of these are in a state of disrepair, there's a good chance you'll have to dip into your wallet over the next few years. For an overview of the state of the co-ownership, you can ask to see the latest minutes. They will give you an overview of the work carried out, voted on or rejected.
Choosing the right location
The fact that you are not living in the property is no reason to neglect its location. If it's going to be easy to rent, it needs to be well located and easy to get to. Put yourself in the shoes of the future occupants and ask yourself what you would like to find nearby. The choice of location goes hand in hand with the target market:
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If you're planning to invest in a studio apartment, choose a property located in the city centre, close to shops, public transport, schools and universities. These advantages will enable you to appeal to a wide range of students and young professionals.
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2 or 3-bedroom flats are best suited to couples, with or without children. Future tenants will appreciate being close to road access, and possibly schools, while still being in a quiet location. To ensure that you can rent your flat easily and at a good price, make sure you target the right area.
Investing in a new-build property to boost your returns
For a good return, invest in new-build property. A new property in a good location is more attractive than an old one. If you're looking in the Paris region, here are some new property developments currently on sale. Tenants are also concerned about ancillary expenses. By renting a new property, they can be sure of saving money on their heating bills. But that's not all! Tenants also benefit from improved living comfort thanks to the use of modern equipment and good insulation (thermal and acoustic). As you can see, a new-build property is more likely to be rented easily and at a good price. What's more, properties arriving on the rental market for the first time are not affected by rent controls*.
For your part, your profitability is guaranteed for several years. Equipment is covered for 2 years by the biennial guarantee, and structural work for 10 years by the ten-year guarantee. The icing on the cake is that by investing in a new property, you can take advantage of tax relief schemes (Pinel, Censi-Bouvard, Girardin, etc.) to reduce your tax bill.
*Except for certain tax relief schemes such as Pinel.
