Buy-to-let investment
Step 1
Real estate investment, the only reliable way to get rich while sleeping
A rental investment is the acquisition of a property which will then be rented out in order to collect rents, an additional source of income for the investor. The objective? That the rents reimburse the greatest part of this credit and that the investor creates assets thanks to the bank loan. This project can indeed be financed by a bank loan. And this is its greatest strength, which makes it incomparably more profitable than the most other existing investment vehicles. A safe way to put your money in stone, rental investment ranks among the most reliable and lucrative investments, benefiting from attractive bank loan rates and tax advantages that the we can qualify as exceptional, if we choose in particular the non-professional furnished rental (LMNP).
Acquiring a home with a view to renting it has many other advantages: the bank lends you, you offer a decent property to a tenant, who will then repay a large part of the loan for you.
Real estate portfolio
Double yield
Stability and predictability
Grow your real estate portfolio and therefore also increase your attractiveness to banks, which will lend more easily for your other projects, and in particular for the purchase of your main residence.
In short, real estate investment, if done properly, can allow you to build a significant property portfolio in just a few years.
Step 2
Deciding to invest in rental property
When to invest ?
There is no age limit for making your first rental investment, but the proportion of people under 30 who invest has increased sharply in the space of the last ten years and now represents 10% of investors. Today, credit conditions have never been so flexible and banks lend money easily provided they show a well-constituted file.The more the rental investment is made sooner, the sooner you can enjoy it!
Should you invest in rental property or your primary residence?
The question that many investors ask themselves. Moreover, 37% of landlords do not themselves own their main residence! Nowadays, banks accept under certain conditions to finance a rental investment even though you are not the owner of your principal residence, because the rent makes it possible to cover a good part and even sometimes all of the monthly payments. quite legitimate, that it is better to pay a loan for an apartment in which one lives, but in the big cities, the cost of housing is such that becoming an owner can quickly become very expensive and less advantageous than renting. Renting also has the advantage of flexibility and you don't immediately have the means to buy an apartment large enough to accommodate your whole family. Do not hesitate to consult our article on this subject.
How to set your budget?
Rental investment is not a project that can be improvised! This is moreover why Beanstock was born. Although the current conditions for obtaining a loan are very favorable (it is clearly the it's time to get started!), buying a home to place a tenant in is not easy. It is essential to find out about real estate in advance and study the project carefully: energy performance of housing), rental tension, rental vacancies, resale tension, type of rental, credit, taxation and rental management. The first step is to define a budget: what contribution can we provide? Is there money for contingencies? Is this accommodation that I could offer to my children in studies? We must not forget to ask the right questions on the heritage aspects: legal regime of the purchase if we invest together.
Step 3
Defining your buy-to-let investment
Which cities to invest in?
The first step in a rental investment project consists in choosing the right location for this accommodation. We must therefore think about several points: attractiveness of the neighborhood and tension of the rental market, resale tension, without forgetting local taxes (and therefore property tax).
High rental tension
High resale demand
Property tax
High rental tension: Depending on the budget you wish to put in, you can choose to buy in one of the major cities such as Paris, Lyon or even Marseille, where the rental market is hypertensive and where you can also rent your property to students and young workers depending on the surface area.In student towns, such as Nantes, Lille or Rennes, the rental market will also be tight for the student category, but beware of frequent changes of tenants! buy bigger and therefore reach young couples or families. You can consult the advertisements to get an idea of the rents charged and to get an idea of the rate of vacant housing.
To buy a property intended for rental, you have to position yourself in an attractive city, with potential for capital gains and a property tax that allows you to obtain an attractive return!
What type of property should you choose?
The type of housing in which to invest obviously depends on the budget you want to devote to the project. You have to keep in mind a basic rule: yield rewards risk.
Buy small
The advantage of these small surfaces is the low weight of these dwellings which exposes the investor less to the costs of joint ownership. In medium-sized cities, two-room apartments are very popular, because they are attractive for longer-term rentals, while in Paris it is the small apartments!You can also choose to buy a new home, 20 to 30% more expensive than an old home, as part of the scheme PINEL Last point to keep in mind: the recent Climate and Resilience law has a significant impact for investors: housing classified G on the energy performance diagnosis can no longer be rented from 2025, in 2028 housing classified F, and 2034 for E-rated housing. We must therefore think about work aimed at optimizing the energy performance of housing for a serene investment.
Buying small surfaces can yield more, since small spaces are expensive to rent per square meter, but the change of tenant can be quite frequent, because this type of accommodations is very popular among students.
How to finance it?
The plan to invest depends on the budget! The smaller your budget, the smaller the surface area of the accommodation. It should also be borne in mind that the monthly loan payments will only very rarely be entirely covered by the rent paid by your tenant.
Savings
Mortgage
Finances
You have to start with a sum that you can (without too much effort) invest in your home on a monthly basis. In addition to this sum, you must have money aside for the unexpected: a hot water tank that fails or for possible work of the condominium. The unforeseen events relating to the apartment being limited by work well done!
Financing your rental purchase project through the use of credit allows you to benefit from the leverage effect as well as an advantageous fidelity, but keep in mind that a minimum contribution is necessary, of at least 10% of the total cost of the project, covering in particular notary fees.
Step 4
Concretise your buy-to-let investment
Analyze the buy-to-let investment project
Have you spotted a property that catches your eye? If you do not go through an agent or a turnkey rental investment platform, such as Beanstock, you will need to master the financial aspects (rent, charges, rental vacancy, profitability of the property), technical (architecture and development work, without forgetting energy performance), but also commercial (negotiation of the price of the property with the seller, negotiation with the banks).
Thanks to our yield simulator, the excel spreadsheet is your best friend in this task. The advantage is that analyzing everything alone allows you to learn a lot on the subject but it is also possible to make mistakes! The necessary work is an important step in the project. We can start from the hypothesis that it will be necessary to count 250€/m2 for a refresh of the property, 800€/m2 for a complete renovation (floor, paint, plumbing, electricity, etc.) and more than 1000€/m2 for works of its “heavy”. It will be necessary to refine this first estimate during the counter-visit once the offer has been accepted by visiting the property with a contractor who will complete your financing file with an estimate.
The stages of the process: from making an offer to the renovations
Ensure the rental management of the property
Then, once the accommodation has been renovated and furnished, it is possible to choose between two options. That of going through an agency, or renting alone. Entrusting the rental management of your property to an agency undeniably presents the advantage of tranquility but also saves time (and energy!) Indeed the agency will take care of creating an exhaustive and attractive real estate ad, posting it on the major real estate portals, receiving and sorting the tenant files and choose the most reliable tenant.It will be able to manage the entry and exit inventory, collect the rents and benefit from its many partnerships: insurance, electricity contract and craftsmen in the event of an urgent problem. It also allows you to be remote: no need to invest in a city close to your home!It can nevertheless be expensive: on average it is necessary to provide between 4 and 7% of the rents including charges without the guarantee of unpaid rents. a an agency has every interest in collecting fees related to changes of tenant and will not choose the tenant likely to stay for a long time. Choosing to manage the rental yourself requires time and additional knowledge: do not hesitate to find out more about our article dedicated to rental.
Taxation: what to choose?
Rental investment is very widely encouraged by the French public authorities through various mechanisms. Depending on your choice of renting empty or furnished, the taxation will be different.
PINEL
LMNP
The PINEL plan, intended for new housing, saves up to €60,000 in taxes. It is supplemented by the Denormandie device, which offers the purchase of an old property to be renovated in certain centers - cities. The empty rental offers stability since it is a three-year lease, and the notice is one to three months depending on the area. The rents are taxed as property income.
The first seed of a great real estate portfolio is now planted
Congrats! You are now a property owner, the first step towards building up your real estate portfolio. Nevertheless, it is necessary to be vigilant at all stages of the buy-to-let investment in order to do it well and generate satisfactory yield.