Real estate investment is one of the best investments to obtain additional income but also to build a sustainable heritage. Rental real estate guarantees guaranteed profitability, a preparation for retirement but also a way to allocate wealth to your descendants. But what are the essential points to know before you start renting real estate? What are the main benefits? Here is a guide to learn about the basics of rental real estate.
The advantages of rental real estate
The rental investment offers you several advantages, including:
- the opportunity to make an income for the future. In retirement, purchasing power diminishes considerably and earned income is reduced. Benefit from rental income thanks to rental real estate is a good way to make extra money to meet the different needs after retirement.
- the opportunity to live in the property after retirement without having to pay monthly rents that can be very heavy in the face of the income of seniors. Nevertheless, we must be sure to have paid the refund related to the mortgage applied before retirement.
- the possibility of attributing the property to his family, including descendants or ascendants while benefiting from a monthly rent. It will offer an attractive rent to your loved ones. Or simply to transmit a heritage to descendants.
- obtaining a home loan is much easier than another type of credit for other financial investments. The refund is provided by the monthly rent.
- the advantage of benefiting from a tax reduction of up to 21% with the Pinel law for renting for 12 years but under certain conditions.
Risks of rental investment
All the benefits mentioned are actually valid if you manage to find a tenant. This is why it will be important to take into account several parameters before choosing the property to buy. And when the rent is also insufficient for lack of study, the investment will not be profitable.
To do this, it will be necessary to evaluate the real profitability of the acquisition by making a ratio between the expected annual rent and the purchase price, without forgetting to take into account the tax advantages.
But long before that, it will be necessary to carefully choose the property on which to invest by studying the real estate market of the city where the property is located. Are the requests more important than the offers? What type of person lives in the neighborhood? Invest for an apartment, a house, a studio or a T2? Choose between new or renovated? Location and local demand are therefore two determining points in choosing a property for a rental investment.
Some tips for a successful rental investment
Before choosing the property to buy, start by defining your targets and obviously taking into account your borrowing capacity to define the type of property to buy. Choose a location that matches your targets and make sure that offers do not exceed requests. If this is the case, be aware that you can not make the investment profitable, and you will be at great risk if you can not find a tenant. Do not skip the first opportunities, take the time to make visits before buying and comparing and do not make many offers. To be able to manage the follow-up of your property, buy in a district that you know, not far from your home. Make profitability calculations by evaluating the potential rent and the future rent of the property.