Real estate can be a profitable investment, as long as you do not invest randomly and take into account the tax system in particular. Discover rental real estate and study all the solutions for investing in stone.
Interests of an investment in real estate
The purchase of an apartment or a house can also be done for investment purposes, it is a very appreciated investment in France. There are different ways to make money with real estate investment:
- either by the value of the investment which can increase (the objective is then to generate a capital gain on resale),
- or by the property income that will be collected via rents after deduction of charges and taxes.
The first thing to do before you decide to invest in a property is to calculate its rental profitability. This is the first golden rule for a successful real estate investment, especially in a context of low rates where housing prices are high in relation to income and rents. You can, for example, use good rental yield calculation services.
This will allow you to study the value of this solution and compare it to other types of investments or to this ranking of rental yields in 100 major cities. You may find that depending on the city you choose to buy and rent your home, the average return will not be the same at all. There can also be wide disparities from one neighbourhood to another. If a rental property investment in Paris has definite assets from a patrimonial point of view and hopes for capital gains, it is quite different in terms of rental profitability.
It is up to you to determine your medium and long-term objectives and the best ways to achieve them through the right property investment:
- Creating additional income to prepare for your retirement, for example,
- increase your total assets,
- reduce your taxes by investing in a tangible asset,
- invest a few tens or hundreds of euros per month,
- invest already existing capital,
- optimising a real estate portfolio, etc.
In the vast majority of cases, investing in rental property will only be interesting in the long term, i.e. over many years. Moreover, it is one of the only investments that can be made on credit, which makes it one of the preferred investments.
Choosing the property, the type of rental contract, the rent and the tenants
As you begin to collect it, it is not a question of investing in the first apartment for sale that you will see and renting to make a profit and collect your first euros. The real estate market is not currently very profitable for private investors: high prices, low average yields, confiscatory taxation and often weak lessor’s rights against bad tenants, etc.
It is therefore essential to make a very careful selection of the property or properties in which to invest. We will come back to this in the various articles in this section. It is important to take into account your local rental property market, the trends in the neighbourhood (is it developing well? Will it be more attractive in a few years’ time?). You will also have the choice between investing in a new property, often with a tax break, or investing in old property with or without work.
The advantages and drawbacks of each type of operation are not the same. Everyone will adapt their project to their income and assets, but it is better to focus on quality and profitability in the long term.