You are considering investing in rental real estate but you want to be advised on how to carry out your project. Investment must be considered part of an overall wealth strategy.
The motivations for investing in real estate are diverse: income supplement, capital formation, tax reduction, securing your savings, making real estate capital gain, taking advantage of the leverage of credit, transferring wealth are all good reasons to embark on rental real estate. But how to invest in real estate?
Our expertise: advice you to make your rental investment
Investing in rental real estate involves many questions:
- Naked or furnished rental?
- Do I have to do an SCI for my real estate investment?
- What taxation on rents?
- What profitability for a rental investment?
- Should we borrow? For how long? Should we make a contribution?
- Invest in Pinel law? Investing in an Ehpad? Invest in a student residence?
- What is LMNP status?
- Year-round rental or short-term rental?
Investing in rental real estate can be a great operation but provided you prepare your project well. A real estate investment must be carefully considered and requires the answers to these questions. The strategy to be adopted will depend on several criteria and in particular the goal sought, the investment horizon, the tax burden, the time to devote to it, the investor’s risk profile. Real estate is an investment that engages over a long period of time and is not very liquid.
5 tips for a successful rental investment
Making a rental investment on a real estate development loan is a relevant solution to build up wealth and a long-term income supplement. The operation has many advantages but there are golden rules to respect to optimize your rental investment. Here are the tips to make your rental real estate investment:
- Control taxation
The type of rental (nought or furnished) and the possible tax exemption scheme will involve serious consequences, both positive and negative. Since real estate taxation is potentially heavy, it is imperative to take advantage of this taxation.
Carry out a comprehensive and accurate simulation of revenues and expenses
Self-financing a rental investment is almost impossible. Indeed, many investors take into account only part of the charges and retain an occupancy rate of 100%. This is not the reality, take into account the rental vacancy, real estate management costs, maintenance work, exceptional condominium fees, property insurance, accounting costs, the CFE, taxation, the renewal of furniture.
- Target an area with dynamic rental demand
Find out about the rental potential of the targeted neighborhood or municipality. What is the relationship between rental demand and supply? A large number of tenants is not enough, the offer must also be less than demand. Otherwise, this can lead to a large rental vacancy, opting for a fragile tenant or a rent reduction.
- Choose a quality location
Location, location and location. The 3 rules of real estate. Target a property close to amenities (schools, shops, means of transport, parking).
- Take into account regulatory constraints
The renovation of the real estate stock leads to a tightening of rental conditions. Thermal strainers are gradually prohibited from renting. Rent ceiling, tense area, compensation laws are all regulatory constraints to respect and know before investing, they will have strong consequences on the rental and valuation of your property.
Do you want to invest in real estate? What tips for a successful rental investment? How to optimize your rental investment on credit? Learn from https://lendingbeeinc.com/california-hard-money-loans.