[Article partenaire] Rental property in France represents, for expatriates and residents alike, an investment that is both profitable and secure. Easily accessible thanks to the loan, this type of financial investment allows you to have additional income, build wealth and prepare for retirement. As an expatriate, you can benefit from interesting tax advantages, such as the LMNP status.
But is it worth investing in a leased property? Let’s take stock of the advantages and limitations of this type of rental investment with My expat.
What are the advantages of investing in a leased property?
– You save time
Invest in an occupied property First of all, you can keep the current rental agreement. You just need to make an amendment to the lease to become the new lessor.
So you don’t need to look for a tenant, which relieves you of long tedious rental procedures (posting announcements, organizing visits, going through the files, identifying the right tenant, carrying out an inventory, etc.).
This will be particularly advantageous in large cities where rental demand is very high, and where many files are filed.
– You save money
By choosing to invest in a rented property, you can also save money compared to investing in unoccupied housing. In fact, the selling price of an occupied home is sometimes lower than an empty home. This discount can go up to 15%. It varies according to several factors, which are all arguments on which you can rely to negotiate the sale price:
The rent : if the rent is low compared to the market, then the price will be lower;
The rental lease : the longer the rental lease, the more interesting the price can be (for example, if a 3-year lease has just been signed).
Geographic area and market tension : if few goods are offered for sale in the market, then the discount will be small. But in tense cities like Paris, Bordeaux, Lyon or Marseilles, the reduction on the selling price can be very advantageous.
The quality of the tenant : the discount may also vary depending on the tenant’s profile (whether he is a good payer or not, whether he has a stable job, etc.).
The standing of the property : a high-quality property in a desirable area is likely to be priced high. In addition, studios, which are in high demand, are also generally closer to market price.
Let us add that a rental investment in an occupied property will allow you to save on real estate agency fees, who will not have to carry out the search for tenants, the visits, the signing of the lease or the inventory of fixtures.
– You make a more secure and profitable investment
In addition to its economic advantage, such an investment also ensures a more secure and profitable investment.
Indeed, you know exactly what you are investing in because you have access to the apartment’s history and the tenant’s history (receipts, litigation, rental file, etc.). All the documents relating to the rental are appended to the promise to sell. Thus, the investment is even more secure for an already rented property.
In addition, you do not experience rental vacations for the first few months, which allows you toconsiderably optimize the profitability of your investment.
You should know that with a “classic” rental investment, in an unoccupied property, it usually takes a month to find the first tenant, to furnish the property and to carry out all the other rental procedures.
However, in the case of an already rented property, the rent transfer takes place as soon as the deed of sale is signed.
– You are more likely to be able to borrow
On the other hand, banks are more inclined to grant loans for this type of investment. Indeed, the risk is minimized because we know the rental history and the quality of the tenant’s file.
What are the limits of an investment in a rental property?
However, an investment in a leased property has a few limits that are important to know.
– You cannot modify the rental agreement
By investing in a rented property, you must keep the current rental lease, with the same conditions (type of rental, rent, duration of the lease, etc.).
You will therefore not be able to switch from an empty rental to a furnished rental, for example. On the other hand, if the contract includes an annual review clause, you can increase the price of the rent, but always within a certain limit.
It is therefore very important to check the conditions of the rental lease before committing, and to take note of everything that has been agreed upon before the sale (for example, if the previous owner offered to pay for certain work in accommodation, you will then have to pay for it).
– You cannot do any work
By investing in an occupied property, you will not be able to do any refurbishment work in the apartment. You won’t be able to either furnish the apartment at your convenience once you become the owner. You will therefore have to wait for the tenant to leave to carry out all these arrangements.
– You cannot choose the tenant yourself
With a property already rented, you will not have the freedom to choose the tenant of your choice. You will therefore have to ensure the quality of the current tenant’s file, and check that there have been no unpaid bills or rental disputes.
Also know that you will have to keep this tenant, unless you decide to live in the apartment or place a member of your family there.
In this case, you will need to send 3 months notice before the end of the lease for a furnished rental or 6 months notice for an empty rental. Otherwise, the lease will automatically renew and you will again be committed to a one-year lease for a furnished rental, or 3 years for an empty rental.
– You cannot set the rent you want
As we mentioned above, the rental agreement is not modifiable. You will therefore not be able to set the rent of your choice, unless a revision is planned for this purpose. So be sure to make sure upstream that the current rent is right for you and that it is not too far from the market price.
Despite these limitations, investing in a rental property is still a good idea, because this type of investment has more positive aspects than negative aspects.
If you are looking to invest in rental property, we therefore advise you not to close yourself off to rented properties, all the more so if:
– You are looking to invest in a property whose price is below the market price
– You don’t want to take any risks
– You do not have time to take care of the rental but you do not want to go through an agency to do it either
– You want to optimize the profitability of your investment.
My expat, a rental investment platform for expatriates, supports all non-residents in their real estate investment in France, from abroad. We manage the entire project, from finding offers to signing the deed of sale, and all this, entirely remotely, via our dedicated platform.
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