How to invest in real estate?

Why leave your savings dormant when you can turn it into a source of additional income through rental? You thus expand your real estate assets, which you will later pass on to your loved ones. But how to invest in real estate? This guide from Ramneek Sidhu of a few steps should not to be overlooked.

Is it worth investing in real estate?

Are you wondering is it a good idea to invest in real estate? Yes, for two reasons:

• Stone has always been considered a safe haven. Even if it is sometimes the subject of real estate crashes, the real estate market has always been able to show its resilience;
• Secured, rental real estate is more profitable than other non-risky financial products such as funds in euros;
• Unlike other financial products, real estate can be financed on credit and therefore generate returns on a value well above your savings!

Finally, to the question why invest in real estate, we can also answer: for tax reasons. Tax exemption schemes and tax regimes can allow you to benefit from tax reductions or a reduction in the taxable base.

How to Invest In Real Estate?

 Invest your capital in real estate in buying old and new properties. Find a lot of properties available for sale from batch skip tracing services and then contact the home owners. This method is the quickest to get your deals closed. 

Is it time to invest in real estate?

Again, the answer is yes. Even if they go up slightly, the borrowing rates remain low, which allows you to benefit from a significant leverage effect. Real estate is the only sector where you can borrow to invest!

How to invest in rental property ?

If you are just starting out, you want to know: how does investing in real estate work? Follow these steps!

Define your real estate investor goals

First you need to ask yourself why you want to invest in rental property. What are your objectives, your investment horizon? What type of tenant are you targeting?

Concretely, you can invest in real estate to:

• Make purchase-resale and generate capital gains;
• Build up real estate assets to pass on to your loved ones;
• Generate immediate additional income or for retirement;
• Pay less tax.

Then, to know how to invest in real estate, you have to look at your target. This will allow you to determine the type of housing to buy. Are you targeting students? Look for a studio or a large apartment for a shared rental investment . For young workers, a T2 is enough, for families, it will be necessary to invest at least in a T3.

Determine your rental financing

You must first calculate your borrowing capacity for a rental investment . This will give you an idea of ​​the budget for your real estate purchase. Future rental income will be taken into account in a proportion left to the discretion of the banks, but generally 70%.

Then, to know how to invest in real estate, you have to wonder about the amount of the personal contribution. Following a recommendation from the HCSF, it has become very difficult to borrow without contribution . Ask yourself how much to inject to optimise your cash flow and get a better rate.

Finally, ask yourself the question of the type of mortgage to choose. You have the choice between the depreciable loan and the loan .

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With an amortised loan, the monthly payments consist of a fraction of the capital and loan interest calculated on the capital remaining due. Over time, you pay less and less interest. You will need to find borrower insurance and choose between the different loan guarantees (bond, mortgage or IPPD ).

With a loan in fine, the monthly loan payments consist only of interest and are therefore lower. The capital is repaid in one go, on the last due date. You will need to pledge a non-risky savings product and find loan insurance.

Good to know: An ideal solution if entry into the premises is not immediate, due to renovation work. In addition, for 2 years, you accumulate rents to build up enough cash to deal with the unforeseen events inherent in the rental of your property (maintenance expenses, rental vacancy, exceptional co-ownership charges, etc.).

Choose between old or new rental property

New real estate has an advantage: notary fees reduced to 2 or 3%. However, this saving is to be compared with many disadvantages. Already the purchase price higher than in the old one. Then, the low quality construction materials, which cause less durability of the frame. It is therefore better to consider buying in the old building to carry out general and energy renovation work. Finally, the 20% VAT, which affects the profitability of the operation.

And why invest in old rental property? For discounted prices, because the supply is abundant and the properties located in premium locations. Lessees are more often looking for housing in the city centre rather than on the outskirts (where new programs are located due to a lack of available land), because they are not necessarily mobile.

Select the location of the real estate investment

How to invest well in real estate? By carefully choosing your sector, to avoid shortages and rental vacancies .

Towns in rental tension are options of choice, because demand there is structurally greater than supply. Let us quote for example Florida, New York, etc. 

The counterpart is of course high purchase prices, which will have an impact on the rate of return. Ask yourself, therefore, about the advisability of targeting a transfer market, as there are so many in the United States. The Grand Paris Express project, for example, makes certain peripheral towns in Paris very attractive, such as Nanterre .

Once the city has been targeted, you should choose a district, depending on your target. Close to universities and colleges for students, shops and restaurants for young workers…