You want to invest in real estate, you are a novice and you don’t know much about this investment? No problem! From the definition of your objectives to the tax advantages, through the choice of housing and tenant, our advice will help you get off to a good start in your career as a landlord.
Are you betting on stone and more specifically on residential rental real estate to build your assets and secure your future? You are right. You are going to buy a durable property that will increase in value over time, you will collect rents that will round off your monthly income, you will be able to benefit from sometimes substantial tax advantages and you will enjoy an attractive rental yield. However, your real estate investment, like all investments, should not be improvised. It is a serious matter, which has an impact on your finances and your assets. This file details the journey of the first-time investor and gives you the keys to successfully completing the operation. Follow the guide!
Precautions before investing in real estate
Don’t throw yourself headlong into an improvised operation at the risk of suffering certain setbacks (difficulties in renting, the need to lower the rent, resulting in a loss of profitability and an impact on the financing plan, etc.). Your priority: be well informed. You will look into the type of housing, the rental market, the choice of tenant and type of rental (empty or furnished), setting the rent, financing and credit, taxation and taxes, not forgetting rental management.
A well-targeted investment. You will start by defining your objectives. The idea, in fact, is to know what you intend to do with your investment. If you want to collect rents in the long term, for example, you will not choose the same accommodation or the same address as if you wanted to take over the house or apartment to live in or to house your children in a few years’ time.
The right strategy for a good investment
Investing in real estate means asking the right questions: do you expect to receive an income in the form of rent? Do you want to take over the property in a few years time to make it your future main residence? Are you going to resell it to make a profit? Do you plan to house your children or pass on the property to them?
The right targets. It is according to the answers to these questions that you will define your strategy, therefore your objectives, which will condition the location and type of housing. If you want to live there within ten years or so for your retirement, you will select it as if it were your main residence. For example, you can invest in a sought-after coastal town. If you are looking to collect rents and make a profit, you will opt for a town with a high demand for rental accommodation. Renting to a student means choosing a town with a university centre.
Well-placed, it’s a must. In any case, choose a good location. The district must be pleasant and above all well served by public transport. The presence of local shops is a plus, as well as green spaces and security. Take an interest in the local real estate market (rental demand, resale and potential for added value).
Rental real estate: choosing a good location
To choose the right address for your rental investment, act as if you were going to live in the unit, as if you were the tenant. You will opt for a neighbourhood that is pleasant to live in, well equipped and well served. If you are investing in a department store or a house, your tenant will be a family. So think about the proximity of day-care centres and schools. If you are renting to a student, you will opt either for a property close to the campus, or for an apartment in the city centre but connected to the university centres by public transport.
Always think about resale. If you put the property back on the market, it must find a buyer quickly and at a good price. This is always easier with a good address. In real estate jargon, this is called the depth of the market and it is an essential criterion. In a dynamic city, transactions go smoothly as long as the price is set objectively. In declining areas, the increase in value is not obvious and properties can be difficult to sell.
A buoyant rental market. Location is not the only criterion for choosing a property. Make sure you select a buoyant market in which there is a real demand from tenants. The major regional cities, university towns, conurbations with a positive migration balance, and border areas will allow you to rent your property without difficulty and with a rent that ensures good profitability.
Renting: conduct the survey.
Caution: in certain medium-sized towns, many new homes were built at the time of the Robien tax exemption. The rental offer is higher than the demand and the rents remain unattractive. Examine the rental market in the chosen town. Find out about the state of supply and demand, the level and evolution of rents. Take a look at office or business park projects, which attract employees and therefore potential tenants.