The key steps
Many French people wish to invest their financial capital and think that the real estate sector is the easiest way to do so. However, like any project, it is important to be well informed and prepared.
First of all, what are the advantages of investing in a rental property?
- ACCESSIBLE TO THE GREATEST NUMBER OF PEOPLE:
Your mortgage will be paid off by your rental income, so the impact on your budget will be limited.
- LOW-RISK INVESTMENT:
There is a saying that "money works better in stone than it stays in a warm bank." The real estate sector is a safe haven because in case of economic crisis, for some people, it is more secure to invest their capital instead of leaving it in a savings account.
- BUILDING UP CAPITAL:
Once the mortgage is repaid, you are the sole owner of your property. The rental income is beneficial in your daily life.
- TAX ADVANTAGES:
The real estate investment allows a tax exemption and decreases your level of income tax, in particular, the Pinel Law for investments in the new real estate.
- INCREASE THE FAMILY PATRIMONY:
Your family patrimony is made up of a set of assets such as: vehicles used by the family, rights accumulated in a pension plan and during the marriage in particular, primary and secondary residences.
-INCREASE THE RETURN ON YOUR SAVINGS:
To become richer is to be able to save. And the more you save, the more you can invest to increase your capacity to generate capital gains.
- PREPARE YOUR FUTURE / YOUR RETIREMENT:
Do you own your primary residence? Investing in one or more rental properties will provide you with an additional monthly income.
Before embarking on the adventure, here are the important steps:
1- DEFINE YOUR BUDGET:
Yes, let's start from the beginning. Before buying anything, you must know your budget and it is important to have saved. Indeed, today, the banks ask you for a contribution, (often corresponding to the notary fees). If your savings are substantial, you are free to use only part of them. The more important the contribution is, the lower the maturity or the monthly payments are. A debt ratio of less than 33% is required. The bank will take into account a part of the income from the rental, i.e. approximately 70%. Indeed, a margin is calculated, in order to protect you against certain setbacks such as unpaid rent, various unforeseen expenses (works).
2- SEARCHING FOR YOUR PROPERTY
Once your budget has been validated by your bank or broker, your research can begin! The list of your criteria is generally less detailed than for your main residence. Nevertheless, it is important to pay attention to certain points:
-The location. A property close to the city center, close to all amenities will have no trouble finding a tenant.
-You can also invest in new real estate and, as a result, you will benefit from certain advantages.
3- CALCULATE THE PROFITABILITY
Of course, your monthly loan payment must be repaid. But, as indicated in paragraph 1, it is important to take into account the expenses as well as the possible unforeseen events.
4- MANAGEMENT OF THE RENTAL
Two solutions are available to you:
-Manage your rental yourself, it is free but this can take time and requires a certain knowledge at the administrative level. It is necessary to choose the right lease (empty or furnished). Find the right tenant who will be able to provide you with a complete file. And of course, you will need to have an insurance against unpaid rent.
-Entrust the rental to a real estate agency. This has a cost but you are safe from the above mentioned issues.
5- DECLARE THE INCOME GENERATED
And yes, no secret is possible for the State, it is compulsory to declare all your income. Different regimes exist and depend on the amount generated and the tax regime.
Now you are ready to live the adventure of rental investment! Do not wait to contact DECORDIER immobilier:
Evian at +33 (0) 4 50 75 15 15 / e-mail : evian@decordier-immobilier.com
- Thonon at +33 (0) 4 50 72 31 95 / e-mail : thonon@decordier-immobilier.com
- Grand Baie at +230 268 28 28 / e-mail : contact@decordier-immobilier.mu
www.decordier-immobilier.com