You are quietly sitting on your sofa after a hard day’s work. You enjoy this well-deserved rest when… the phone rings. Are you picking up the phone? Error: it is a pollster who came to inquire, for a tax survey. His first question will be to ask you if you pay more than 4000 euros in taxes. If not, you can sleep soundly, your sonar unit will leave you alone. Otherwise, be prepared to endure a long speech on a miracle product, which allows you to prepare for retirement, while reducing your taxes, without costing you a penny: the IMMO-BI-LIER! The diagnosis is simple: you have been harpooned by a tax exemption sale….
These are some questions to ask yourself before giving in to the proposals of real estate sellers. And, more generally, before you rush to the first place you come!
This is the heart of the operation. So let’s make no mistake about it. The first question to ask yourself is the type of property: apartments or houses. The latter are considered more expensive to purchase and maintain, but in return, they build tenant loyalty and are of a good rental ratio. Obviously, there are not them everywhere, and in big cities, their price makes their profitability ridiculous.
There’s still the apartment. From the point of view of gross profitability, it is better to take a small area, such as a studio, which will be more expensive per square meter than a three-room apartment. However, studios tend to target more mobile populations and tenant rotation often leads to work or even rental vacations, which sharply reduces their profitability. But the owner of a three-room apartment, due to lack of rotation, cannot sign a new lease frequently and therefore has his rents revalued less often than those of a studio.
Once the size of the apartment has been chosen, it is necessary to review all the characteristics of the building. Its manufacture. Electric heating will probably be preferable to central heating, as it will be less expensive… for the owner. Then, second important decision, it will be necessary to choose between new and old.
The Nine has an unstoppable argument: it makes it possible to carry out tax-exempt operations. It is therefore naturally intended for those whose top tax bracket is 30% or 40%. It will allow you to build up your assets on credit, while benefiting from significant tax savings. The Scellier law, but also the Robien and Borloo systems (until the end of the year), the Malraux laws and investments in ZRR meet this need. These devices also have their downside.
They attract many intermediaries who will not hesitate to contact you until very late at night at your home. Professionals often say that a new property is “sold”, whereas you have to “buy” an old property, i.e. you have to do the process yourself and meet the sellers.
The old one, which is more stingy with tax measures, even if there is a rehabilitation lease and the old Borloo, has other advantages. Its purchase price is generally lower than that of new property, its profitability higher and its prospects for higher capital gains. Especially today, when some sellers are in a hurry to sell their property and grant significant discounts… It is therefore the ideal investment for those whose marginal tax rate is less than 30%.
Where to invest?
Popular wisdom says that the first three rules of a good real estate investment are place, place, place. A special rule could be added for rental investment: proximity to the investor. All the victims of failed assemblies bought homes they had not seen, in cities that were several hundred kilometres from their homes. It is therefore important to visit the property and to know the rental fabric of the place where you are investing. Who, among the victims of the Robien de Montauban, went there to “smell” the market, interview real estate agents and consult statistics on population movements or the establishment of new industries in the commune? Probably no one.
Be aware that it is often enough in small towns where the migration flow is not intense, the arrival of a new residence to disrupt the rental market. A large, dynamic metropolis, with researchers and students, will necessarily benefit from a better rental market than a sleepy small town. And there’s nothing better to make sure of that than to go for a ride before you decide!