Real estate investment has many advantages in the eyes of the French, including the fact that it offers a better return than traditional savings solutions. Nevertheless, if one wishes to increase the profitability beyond the symbolic threshold of 10%, it is necessary to think of differentiating oneself on the market and to think of a rental investment that stands out. According to the patrimonial objective of an investor and the capital he has, the best investment will not be the same to be finally profitable or with direct patrimonial objective.
The latest trends in rental investment
Aiming for returns that go well beyond the usual ratios is often the ambition of investors who rely on rental real estate to achieve financial independence. To do this, rents that only cover the monthly loan payments are not enough for them. What they aim for is the famous positive cash flowThis is to say, to generate a positive balance between what their rental investment costs them each month and what it brings in. But where exactly is it hidden? In certain niches of the real estate market, driven by the most current trends in housing.
Seasonal rental
It is the star of the high yield rental investment: the seasonal rental shows amazing rates of return, which sometimes exceed 20%. No, this is not science fiction, but simply the result of a rental return negotiated on a short or very short term basis, which allows the lessor to charge rates close to those of the hotel industry. As with colocation and coliving, new ways of living and moving around are at the heart of the success of this type of rental investment. The landlord has a great deal of freedom to vary his rents according to seasonality because there is no rent control. There is no risk of non-payment either, as tenants pay in advance for their stay on platforms such as Airbnb.
The good plans of the seasonal hiring ? Properties located in tourist areas have particular attractions for renting in summer as well as in winter. Even if the current legislation has been tightened in large cities such as Paris, seasonal rentals benefit from the rather advantageous tax regime of furnished rentals, under the status of non-professional furnished renter.
Colocation and coliving
Who would have thought that living in a community would come back in fashion? But that's what's happening with shared accommodation and its most basic version, coliving.
The shortage of housing in large cities is at the origin of this evolution, which generates an ever-increasing rental demand. A whole population of students, young workers, but also senior citizens or people on professional detachment, are rushing to shared housing.
High-end shared apartments and coliving apartments, which have some of the characteristics of a "shared apartment" but with a higher standard of living and more services, are among the most profitable rental investments, with rates of return of between 8 and 10%.
The best deals? Market-rate properties in large student cities, with small homogeneous areas that are suitable for coliving. Coliving rental investments are rare on the market, they concern large-scale real estate projects that are just starting up at the moment. Nevertheless, the rates of return are excellent, because the rents charged will generate rental income higher than those of coliving.
The building of report
A price per square meter negotiated at wholesale prices and a regular income every month thanks to not one, but several rents, this is the secret of the investment property.
This rental investment can be very profitable, because if the average rate of return is around 5%, a well negotiated real estate project of this type can reach 15%.
The buyer will take great care to choose a "healthy" property and to examine the issues of urban planning and real estate law. Nevertheless, it is possible to make a success of very nice operations, in particular by choosing the real taxation and by creating a land deficit. A godsend for taxpayers whose income tax is in the high marginal brackets. With a few renovation works, the building of report is a real estate investment which allows them to cumulate tax reduction and capital gain in the long term by thinking of the resale.
How to find a "nugget"? Real estate investors experienced in this type of rental investment often find a property that has been on the market for a long time and whose purchase price they can easily lower. With the help of a good team of craftsmen, a rental property that is falling into disrepair can be made to look like a new home within a few months. Old buildings, town houses, lots of buildings... All these real estate investments are profitable, once renovated, as long as the rental demand exists in the area. The building of report is part of the investments cherished by those which exploit the effect of leverage of the credit, with an aim of constituting a real estate inheritance, while coveting complementary incomes.
A few more leads
To be even more daring in terms of rental investment, or to better diversify your assets, it is possible to explore other niches in the rental market.
The parking lot
Admittedly, it is not a very attractive rental investment at first glance, but a parking lot offers a rate of return of between 4 and 6%. Its main strength is the low purchase price, between 5,000 and 30,000 € in Paris. A parking lot eliminates the costs of rental management, as it does not require any maintenance. On the other hand, you have to count on low rents and rental incomes, considering the minimum price of rents, so preferably multiply the acquisitions in the same place. The notary fees are also quite high for what is still considered as a rental property investment.
Residential services
The returns are far from those of seasonal rental, but they still allow you to expect between 4 and 6% for a room in a senior residence, student residence or Ehpad. The price of the entry ticket is also attractive, since a student room starts at 100 000 €. It is important to be vigilant about real estate programs selling at above-market prices and about managers likely to lower rents, thus reducing the rental profitability of the operation along the way.
