Rental investment: old or new?

(Partner Article) You have chosen a real estate investment, but you do not know what to choose between a good old or new? Whether discounted prices, tax benefits or added value, we take stock to help you make the best decision for your investment.

1. Invest in old real estate

For a property to be considered as old, it must be built between 1880 and 1950. Note that old properties most often require renovation work, which, ultimately, can benefit you because you no you will not have to do them later.

Invest in theold real estate to renovate is really interesting. In addition to a lower cost of purchase, certain expenses related to the work can be deducted from your taxable income. This makes it possible to release less important property income, to see a deficit. However, this is only possible if you decide to adopt the real or micro-land regime that allows you to enjoy a 30% tax abatement. Invest in an old report building also represents a very good real estate investment opportunity. For example, by making a division of apartments, you can increase your rental profitability. Per square meter, smaller areas are more profitable than larger ones.

Before you invest, you need to study the real estate market of the city as well as the opportunities it offers. If you want to make a rental investment it is important to look at the attractiveness of the location and its rental demand. Compare also the prices offered. However, these may also vary depending on the location, the floor or even the exposure.

Finally, if you buy an apartment to renovate, take the time to make an estimate of the necessary work. Indeed, this type of investment can be really profitable but it must not be forgotten that many work of refitting to standards will be inevitable. Thus, by making an estimate that you add up to the purchase price, you will have an idea of ​​the profitability of the property. For that do not hesitate to call on real estate professionals for the visit of the property. Indeed, they can detect structural problems of the building, water infiltration or other …

2. The benefits of the old rental investment

The old rental investment offers many significant benefits that make it a preferred investment for investors. Overview of these assets.

First of all, as we told you before, the cost of buying an old good is much lower than that of a new good, between 20% and 30% cheaper while having equal characteristics. . Indeedthese dwellings are discounted. Thus, it allows you to carry out renovation work while maintaining good rental profitability.

Another positive point, this type of property often has more cachet, which can serve as a favorite element during visits and thus reduce your risk of rental vacancy.

Reporting buildings and old apartments are mostly located in city centers, ie where rental demand is highest. For example if you make an investment in the center of Paris, the rental demand is such that it is just in time, your housing will never remain vacant very long.

The biggest advantage is real estate taxation. Several advantageous tax devices are available:

– The status LMNP (Rented Furnished No Professional)

– The Malraux scheme

The LMNP status is a status with very little risk. To access it, your rental income must be less than € 23,000 per year or less than half of your total income. You must of course propose a furnished rental respecting the list of mandatory equipment. Regarding the taxation of this status, nothing very complicated. You must subtract your rental expenses from your income and thus release a deficit. This allows you to pay no tax on its rental income for the duration of the work. The old LMNP regime is a very attractive scheme and by renting a furnished apartment, the rents you will receive will be higher.

3. Invest in Pinel

First of all, what is the Pinel Law?

It's a law to reduce taxes in case of investment rental real estate. The investment in Pinel only concerns new properties. It aims to revive the construction of new housing by encouraging investment. This law is also intended to allow people with modest incomes to access the rental of a property. In return, it allows investors to have a tax reduction during the rental period.

Admittedly, the selling price is higher for a new property than for an old property, but it will go very well to an investor not wishing to carry out work. In terms of energy performance, a new property will have a better score than an old property if it has not been renovated. In buying a new program, the real estate buyer must also be aware that he will not necessarily have the opportunity to visit, especially if he buys off plan. It will also be necessary to wait between 18 and 24 months before the delivery of the good. During this time, you will begin to pay for housing without still receiving rental income.

Tax should not be your only success factor, it depends on your ambition in the short and long term. Indeed, in law Pinel, the more you agree to rent for a long time, plus your tax reduction will be important: 12% for 6 years, 18% for 9 years and 21% for 12 years.

Just as for an investment in the old, before investing through the Pinel device you must prepare your investment and your application for funding.

We must also be vigilant to the two ceilings of the Pinel device: the purchase price of your property must not exceed 300,000 euros per year per person and the price per square meter must not exceed 5,500 euros. These ceilings can sometimes prevent rental purchases in certain cities …

4. Calculation of rental profitability

The calculation of your rental yield remains the same whether for an investment in the old or Pinel law. Before you start, it's important to know if it's a profitable investment or not.

In all cases for the calculation of the gross profitability you have to divide the amount of the annual rent by the price of housing. Once the result is obtained, you multiply it by 100.

To have a better vision of your rental yield, you can calculate the profitability net of expenses of the latter. For that, in the previous calculation it is necessary to subtract to the rent all the nonrecoverable charges on the tenant, the property tax and the expenses of managements if there are in it.

This calculation comes in the simulation of your rental investment and its financing. You can add it to your financing file to demonstrate the profitability of your investment when you deposit it.

5. CounselingRental Investment for your real estate investment

It is important that you take the time to weigh the pros and cons and take into account the benefits of these two investment processes. We can not say that there is one better than the other, it really depends on what you want in the long term.

The location of a property being a central pillar of a rental investment, it is important that you remember two things: the old properties are in the city center, are discounted but require work and new properties are found rarely in the city center or in cities where prices are too high, but you have no work to do.

Arbitration is up to you. You can turn to specialized companies in order to delegate your real estate transaction. Rental Investment offers a turnkey service. The teams take care of all the stages, from the research of the good until the rental management of this one.

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Note: "Partner Articles" are not articles in French Morning's editorial staff. They are provided by or written to the order of an advertiser who determines the content.