Should you invest in stone? Many French people ask themselves the question, sometimes because they are looking to expand their investments, other times because they want to pass on real estate assets to their descendants. Whether you are in your thirties, forties or fifties, the reasons for investing are not the same, but the questions you ask yourself are similar: can you launch when you don’t know anything about it? How long can we expect to generate additional income? Is it better to invest in small or large surfaces?
David Lelong is the founder of immobilier-danger, a website giving practical advice to all those who are directly or indirectly interested in real estate: buying a property, taking out a mortgage, getting good insurance… He answers to the questions asked by many French people who are about to take the plunge, sometimes for the first time. With regard to rental real estate, he specifies from the outset that not everyone can get started, because it largely depends on their borrowing capacity, and that “some of the investors will be limited at the level of the budget for a first investment”.
As for how much time we’re willing to give it? “There are several possibilities depending on the time we can free up. We can do everything alone but it’s very time-consuming or we delegate certain things to a real estate agency, to service providers, but that has a cost”. If you don’t have a lot of time but the desire to get started, you can get support, but if it’s the opposite, you can save on these costs and do everything yourself without worry. You choose.
For David Lelong, no matter how you manage your property – alone or accompanied – the essential thing before starting is to have a well-defined strategy: “You have to target your needs and your long-term objectives, because the real estate is a long term investment. There is therefore no question of rushing into the pile without first finding out about your borrowing capacity of course, but also about the net income that you can generate after five, ten or even twenty years.
Another essential point according to the expert, taxation: do you want to invest in furnished or empty accommodation? A question that is important, since “income is taxed in land for empty rental and they are taxed in industrial and commercial income for LMNP (non-professional furnished rental)”, specifies David Lelong. Depending on the choice you make, the rental and notice periods are not the same…
To develop your strategy, ask yourself the right questions, taking into account your age, what you want to do with your investment and your current income.
Regarding this last point, David Lelong believes that, for someone who is starting out, “it is better to multiply small areas, because that makes it possible to dilute the risks in the event of rental vacancies, works and unpaid rents. With big properties you necessarily pay more while when you have two or three properties, if you have a problem with one of them, the other or the others continue to do well”. Be careful, this strategy requires a little more time, to find the goods as well as to manage them.
Once the answers to all these questions have been found, it is important to ask questions, too, about the location of the property. David Lelong advises to “favor cities that are fairly dynamic in terms of the job market”, because “you must always be able to easily find tenants, that demand is greater than supply”. Should we opt for a big city like Paris? “Not necessarily”, tempers the expert to Planet, advising to “favor medium-sized towns”, where the market is dynamic and still growing: “You have to make sure that the district is in development, that the property can take value, both in terms of rent and resale price”. What additional income can we expect to generate with the rental investment?
Everything is possible with rental investment, but be careful, because getting “1,000 euros net of additional income each month can take quite a few years”, explains David Lelong. The simplest solution? Investing with a lot of savings and little or no mortgage, but this is a strategy that can also be risky.
By following the advice provided by this expert, you will be able to generate income from your investments, in the more or less long term depending on the credit committed, the number of properties rented, the cities where they are located, etc. To achieve this, keep in mind these three points, according to David Lelong:
