Investing in rental real estate is an increasingly popular approach among the French. Whether you are looking for an income supplement, a way of diversifying your investments or you want to prepare your retirement, buy an apartment to rent it can be a long -term profitable strategy. However, being successful in this investment requires good preparation and a deep understanding of real estate market mechanisms.
Here is a complete guide to help you succeed in buying an apartment for rent.
Define your goal: Why buy to rent?
Before investing in an apartment for rent, it is essential to clearly define its objectives. They will guide their decisions throughout the purchase process.
Additional income
Many investors opt for rental real estate to benefit from additional regular income. According to a study conducted in 2020, nearby, nearby 60% of owners’ owners are under 50 years old And use your rentals to improve your standard of living. In fact, rental income can help cover daily expenses or finance other projects.
Prepare for retirement
The rental real estate state is also an option increasingly adopted by future retirees. According to a survey conducted by the Association for the Promotion of the Supplementary Pension Plan, approximately 30 % of retirees believe that real estate rent is an important source of income during retirement.
Investment diversification
If you already have financial investments (shares, bonds, etc.), investing in rental properties is a good way to diversify your assets. In fact, even if the real estate market can be cyclical, the value of real estate tends to grow in the long term.
Choose the location carefully
One of the most crucial aspects in the purchase of an apartment to rent it is the location of the property. The location plays a decisive role in rental efficiency and future assessment of its property.
Large cities: a dynamic market
The great French metropolis such as Paris, Lyon, Bordeaux or Marseille have the advantage of an active rental property market. Demand is strong, especially due to the concentration of students, workers and tourists. According to a study by the Sloger platform in 2021, theThe rental vacancies in the main French cities is less than 5 %which means that it is generally easier to find tenants quickly.
However, investment in these areas can also be more expensive. In Paris, for example, the price per square meter is around € 10,500, which makes the initial purchase cost higher. Therefore, it is important to accurately calculate the rental yield before the launch.
Medium cities: a good commitment
Many medium cities, such as Rennes, Nantes or Montpellier, offer interesting investment opportunities. Purchase prices are generally more affordable than in Paris or Lyon, and rental demand is still supported. In 2023, according to a study by the National Federation of Real Estate (FNAIM), The average price of the square meter in these cities varies between € 3,500 and € 4,500, with rental yields of up to 6 %.
Development cities
Some less known cities, but in full development, can also offer interesting investment opportunities. Cities such as Tours, Angers or Dijon experience a constant increase in their population and attractiveness. Investing early in these areas allows us to benefit from the interesting long -term added value.
Calculate rental performance
Rental yield is a key indicator to assess the profitability of a real estate investment. It is calculated by bringing the annual gross rental at the purchase price of the property.
Gross yield and net performance
It is important to differentiate the gross performance of net performance. Gross performance is calculated simply by dividing the annual rental by the purchase price of the property, then multiplying by 100.
For example, if you buy an apartment at € 200,000 and receive an annual rental of € 10,000, its gross yield will be 5 %.
The net yield, on the other hand, takes into account the charges and taxes related to investment (property tax, management rates, work, etc.). It is generally lower than raw performance, but better reflects the reality of the profitability of your investment. According to the CLAMER OBSERVATORY, The average net rental yield in France is around 3.5 % in 2022.
Tax impact
Tax plays a decisive role in the profitability of your investment. In France, the rents received are subject to taxes in the property income category. However, several devices allow taxes, such as the real tax regime or the Pinel system, which offers tax reductions under certain conditions.
Choose proper financing
Investing in rental real estate often requires resorting to a mortgage. It is essential to choose your financing to optimize your investment.
The fixed or variable rate loan
Most borrowers opt for a fixed rate loan, which offers monthly payments stability during loan duration. However, with historically low interest rates in recent years (1.5 % on average in 2023 according to the Housing Credit Observatory), Some investors resort to variable rate loans to benefit from short -term advantageous conditions.
The lever effect
The lever effect allows you to invest in real estate using mainly money. The principle is to generate enough rental income to reimburse the loan and generate an excess cash. However, it is important to take into account the risks of this strategy, especially in the case of a prolonged market or vacancy.
Handle your very effectively
Once the apartment is bought, it is crucial to guarantee good property management to maximize profitability and minimize problems.
Direct rental management or through an agency
The management of a rental property can be carried out directly by the owner or entrusted to a real estate agency. Direct management reduces costs, but it requires time and good organization. On the other hand, going through an agency makes it possible to delegate administrative management and relations with the tenants, but this leads to management rates (generally around 7 to 10 % of the income collected).
Interview and renovations
Regular property maintenance is essential to guarantee its sustainability and attract tenants. It is also advisable to provide renewal work every 10 to 15 years to maintain or increase the value of the property. According to a study by Deloitte, A well -maintained property can see its increase in the rental value by 10 to 15 %.
Buying an apartment to rent it is a potentially lucrative investment, but that requires a deep reflection and good preparation. The choice of location, the calculation of the rental performance, financing and property management are essential elements to guarantee the success of your investment. By taking into account these different factors, maximize their chances of success and guarantees a stable and lasting rental income.
Whether you want to prepare your retirement, diversify your investments or benefit from additional income, rental real estate can meet your expectations whenever you are well informed and well prepared.
