rental property
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The 10 steps to investing in rental property

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From the heritage audit, through the financing file, real estate aid and tax exemption systems, without forgetting the search for property, whether for a rental investment in new or old, it is important to prepare for it. Find out how to do it and the steps to remember before you get started.

Welcome Real estate tax exemption Rental investment The stages of rental real estate

1/ Take stock of your assets

Real estate investment and haste do not mix. To give yourself every chance of succeeding in the best possible financial operation, you have to take the time to analyze the ins and outs and this starts by drawing up a heritage audit . Do you already own real estate, your main residence and/or rental property? Do you have savings accounts or investments that can be used as a personal contribution for financing? How high can you support a mortgage without impacting your remaining life? All these questions must be the subject of a meticulous heritage assessment, in order to lay the foundations of the rental project .

In order to facilitate the calculations which can sometimes be tedious, a wealth management advisor can accompany you to establish this first wealth assessment and help you see more clearly. A financial situation is not fixed in time and can be regularly the subject of a professional point according to the financial and personal evolutions encountered during a lifetime. This is a good opportunity to take advantage of the best possible investment products and strategies according to each profile, correlated to the current situation.

2/ Define the project and an investment plan

The overall project budget will depend on the type of property to be purchased. Its typology (number of rooms), the nature of the property (new or old), its city and its district, are all elements that will have to be looked at closely to enter the fixed price range.

But that’s not all ! The rents charged in the different metropolises can be a decisive element for a rental investor. Find out about the rents charged and the ceilings imposed in the case of new tax-exempt accommodation. Once the different stages have been established, calculate  the costs and returns  between the different expenses and cash inflows generated by the rental income. The more detailed the financing plan, the more likely it will be to end up with a long-lasting and secure project. This will also be an indispensable argument for obtaining bank financing for the purchase of rental accommodation.

3/ Find out about aid and tax exemption schemes

The profitability of rental accommodation also depends on the tax exemption measures favored by its purchaser at the time of purchase of the property. To date, there are various real estate tax exemption measures allowing taxpayers to considerably reduce their taxation. The purchase of a rental property is very often a motivational objective to lower your tax , while increasing your real estate assets. The new and the old both benefit from their own tax exemption schemes , the conditions and objectives of which are clearly defined for each of them.

Tax exemption in old real estate is also a guarantee of higher returns. Rent Affordable ,  LMNP status  or the Denormandie law , the means to help landlords in old real estate also exist and participate in particular in maintaining and renovating French heritage. To understand and assess the tax exemption rates and the conditions of each tax exemption scheme, again, a wealth management advisor is the ideal professional. He will be able to guide you in your steps.

4/ Choosing between new real estate and old real estate

As we have just said, new and old real estate both have their own characteristics. The advantages of new and old are to be compared, in order to determine which format suits you best. Investment in the old attracts for its lower price than new housing. Very often located in very dynamic urban sectors , such as city centers, they attract categories of young candidates for rental , attached to the proximity of metropolitan entertainment.

However, investing in old housing requires special attention and anticipation of the work to be planned in the housing, but also in the condominium. The State has also set up energy renovation aid to enable owners to maintain their property and improve the housing conditions of tenants. The law prohibiting renting for bad DPEs also motivates a large number of rental investors to sell their property rather than embark on large-scale renovation work.

5/ ESTABLISH THE ACCOMMODATION SEARCH CRITERIA

The rental prices charged in the different cities and the real estate market prices for sale are also important factors to analyze before embarking on the purchase of a rental property. The area of ​​the property, conditioned by the price per m², is also an essential selection criterion. Tenant targetsdesired must be studied upstream, because the number of rooms and the size of the accommodation will be more sought after depending on the type of tenant. A student on a low budget will favor renting a studio or a T1, while a young couple can afford to rent larger. This detail is not one, it will be responsible for a greater “turn over” in the event of student rental, but for larger applications.

6/ Acquire the ideal accommodation

To make the best choices and not make mistakes in your rental property investment, the wisest thing is to be accompanied by the right professionals. The real estate market is changing due to rising inflation, rising material costs, rising borrowing rates and new banking restrictions. However, rental property investment has never been so promising. With rental tension increasing more and more and real estate remaining a safe haven, it is an investment strategy that remains lucrative, but you still have to know how to go about it.

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