My advice for investing in real estate
Real estate investing offers a bright future being the fall in interest rates. However, before you jump into the business, it would be a good idea to educate yourself and seek advice from the experts.
If you are a newbie investor, the following tips can help you understand the steps to take.
What are the interests in real estate rental investment?
This question really deserves to be asked since it is all the same an investment that involves a certain amount of money. Such a decision will have a serious impact on your finances as well as your quality of life. Here are the advantages of rental investment for an individual.
It’s an easy way to build up additional income . Indeed, the rents generated bring you additional additional money in the long term.
It is especially retired people who use this technique to live peacefully in the future. In addition, this property that belongs to you will increase in value over time.
By making this type of investment, you benefit from a leverage effect on the credit you borrow from a financial institution . Even if you have a considerable budget, such a project still requires funding from a bank.
Obviously, you got a reduction in the tax burden. There are many profitable mechanisms that respond to this: Pinel Law, LMNP , land deficit, etc.
Choosing the right geographic area for a profitable rental investment
To be sure that you will benefit from your investment, choose an attractive and dynamic city. Thus, you will have all the chances on your side to find solvent tenants.
Choose a region with a continuous rate of population growth, a district served by public transport (metro, bus, taxi, etc.) and a municipality with several commercial infrastructures .
These are the characteristics that you should study in advance. This city in question may have a high concentration of businesses, tourists and students.
Better yet, check the listings to find out the vacancy rate in the desired neighborhood .
You will also find the rental rates there. Be aware that overpriced accommodation is difficult to rent and the occupants leave it at the first opportunity that arises.
If you decide to run your own business, choose a location not too far from your home. If possible, choose a city that is less than an hour by transport from your place of residence.
Finally, to find good deals in your future neighborhood, always stay on top of the news. You need to know the lower price and the market average, if an apartment is for sale, places suitable for nightlife or not and even the increase in crime in the neighborhood. Do not hesitate to do scouting in the field.
Which one is more profitable: a furnished or empty rental?
Before renting a property, all owners ask themselves this question: should we rent empty or furnished? What would be the most interesting? Here is the difference between these two concepts.
Obviously, the price of an empty rental is much lower compared to a furnished property . The risks are lower with regard to the collection of rents and management fees. And the maintenance of the property before the visit is done quickly.
The furnished rental is higher, but it is more profitable compared to the empty rental. Only, you have to introduce in your calculations of net rental yield, the charges and the related taxes.
This last element plays an important role in having success in your rental investment.
The amount needed for a real estate investment
To finance a first real estate investment , you can take out a loan from a financial institution. If it is a studio for less than 100,000 euros, borrow for as long as possible .
However, do not forget to provide security savings to ensure a rental vacancy, taxes and repairs related to your expenses such as the breakdown of the heating or water heater. There are certain jobs that can be deducted from your income. This is the land deficit.
Mistakes to avoid
To prevent real estate investing from turning into disillusionment, you need to consider these following mistakes:
The field of real estate is a very complex field, because you have to respect certain rules. To be ready, you need to prepare your shot well.
Admittedly, many people get rich very quickly by choosing to invest in this sector, but they forget that this kind of investment is made on credit. You need to have patience as well as persistence because it pays off only in the long run.
After doing some renovations, you tend to increase the rent price in order to recover all the expenses . However, this is a fundamental error that must be avoided.
You have to apply a similar or slightly lower rent than your competitors. Find out about equivalent properties and rents in the neighborhood.
Once your apartment or house is ready to welcome a new tenant, it is time to proceed with the preparation of the lease agreement. The writing of this document is very important and should not be taken lightly.
It covers most of the important points when it comes to renting your property . It will serve as protection in case of difficulty with your tenant.
To solve rental investment problems yourself, manage your home yourself. Over time, the costs may reduce the rental profitability of your expenses.
As a landlord, you have every right to be tough and tough on bad payers. In this case, intervene immediately in the event of late payment.
To keep the current condition of your home, maintain it regularly. If necessary, renovate anything that is in poor condition: painting, repairing small defects, etc. The best way is to place a maintenance fund with an annual amount which should not be underestimated.
Real estate investment: always profitable!
To find out if investing in real estate is still profitable, take a look at trends and developments in this market . A few years ago, the prices of goods on the French real estate market experienced a significant drop.
But little by little, the market has rebalanced itself, thanks to the fall in mortgage rates which encourage the acquisition of goods.
For now, real estate investment is still profitable and has many advantages for people who risk it. You don’t have to be necessarily rich to invest in this area. You just need to collect income and not be in debt.
The whole point is to offer a solid case to the bank, and to present potentially profitable and realistic real estate projects. Thus, a real estate investment is a project that cannot be prepared at random.