The market for real estate investment companies (SCPI) has developed strongly in recent years to reach a peak last year. Savers flocked to these unlisted real estate funds, pouring in more than 10 billion euros. These investments are not lacking in advantages, it is true. They provide easy access to a diversified real estate portfolio, consisting mainly of professional properties (offices, shops, warehouses, clinics, hotels, etc.) and to a share of the rents from this portfolio. Above all, the yield has been solid over time, with the payout ratio having reached 4.53% in 2022. The success of these products is also due to the fact that the sector has never stopped innovating to meet the needs of an ever-increasing number of investors. Different solutions have thus been developed.
Scheduled payments
Compared to the acquisition of a building directly, the investment in SCPI requires a limited budget. A few tens of thousands of euros are however required to obtain a diversified portfolio. As this level remains too high for some, property management companies have developed scheduled payments. “You deposit small sums every month to build up capital over time,” explains Christophe Descohand, the boss of the online platform Moniwan (La Française group). The minimum amount, which depends on the actors, can correspond to a few tens of euros. Attention: some require at the start to hold at least one or more full shares.
It is also necessary to be interested in the practical modalities of this technique. In particular: will you receive the dividend if you do not own a full share? The answer varies. “At La Française, when you place 50 euros per month on an SCPI which is worth 150, the sum is deposited in the SCPI’s partner current account, which immediately replicates the performance of the support, details Christophe Descohand. You automatically become owner of the SCPI when you have reached the share price.” Some allow the automatic reinvestment of dividends in the product.
A capital of 100,000 euros with 300 euros in savings per month
Buying on credit
In recent years, very low interest rates have led to a boom in this mode of acquisition. “Only real estate allows you to acquire assets without starting capital”, recalls Nicolas Van Den Hende, director of savings at the management company Sofidy. The only prerequisite: having a savings capacity. “It is possible to build up a capital of 100,000 euros over twenty years with 300 euros of savings effort per month”, assesses Jérémy Schorr, commercial director of the Primaliance platform.
The mechanism is as follows: you borrow all or part of the capital you wish to invest. The dividends paid by the SCPI will allow you to repay part of the monthly loan payment. The longer the loan period, the more the differential will be reduced, but it will be difficult to cover the entire monthly payment by dividends. “We calculate for our clients the amount that they will have to add each month, indicates Pierre Garin, director of the real estate division of the broker Linxea. do not forget the taxation associated with property income.” Good news, however, interest is deductible from property income, which limits taxation.
Another element to take into account: the period of enjoyment. Between the date of purchase of SCPI shares and the collection of the first income, several months will pass. During this time, you must be able to meet your deadlines.
In the current context, the acquisition on credit must however be approached with caution because the cost of financing has increased. “Interest rates fluctuate between 3.5 and 4% for a loan over twenty to twenty-five years, notes Jérémy Schorr. This nevertheless remains relevant by focusing on SCPIs with the highest yields.”
An advantageous strategy
The temporary dismemberment
Very popular with future retirees and highly taxed households, it consists of acquiring only the bare ownership of the SCPI in exchange for a discount on the share price. In practice, the longer the duration of the dismemberment, the greater this reduction. Over ten years, count 30 to 35% off. Throughout the duration of the dismemberment (ten to fifteen years most of the time), you will not receive any dividend. As a result, you do not suffer the heavy taxation of property income. But at the end of this period, you will become 100% owner of the product. You can then benefit from the income from your investment or resell your shares and pocket your gain.
© / The Express
It should be noted that in the meantime the share price may have evolved, either upwards or downwards. “If the SCPI has not appreciated in value, you pay no tax because the purchase price used to determine the capital gain is that of full ownership at the time of the investment, specifies Jérémy Schorr. On the other hand, if the real estate stock has increased, this will generate a taxable capital gain, but much lower than the gain made. An advantageous strategy, provided you do not need your capital before the end of the dismemberment. “Once the duration has been set up, it cannot be modified. It is therefore better to plan too short than too long, underlines Pierre Garin. In addition, the money being blocked, it is necessary to have liquidity elsewhere.
real estate in life insurance
“We have experienced strong growth in life insurance, which now represents 30% of the collection on our real estate funds”, notes Nicolas Van Den Hende. However, housing SCPIs there has as many advantages as disadvantages.
First of all, be aware that you will not receive any additional income because the rents from the SCPIs will be paid into the life insurance in order to be reinvested. In addition, your choice will be limited to the products referenced by your insurer. For more variety, it may be appropriate to subscribe to a new envelope, with an online broker (Linxea, Patrimea, Placement-direct.fr for example) or a wealth management advisor.
Life insurance retains strong assets
It will also be necessary to read the general conditions which detail the operation of the contract. For example, some companies cap the amount that can be invested in real estate. In addition, “check that 100% of the income is paid to you because some insurers keep up to 15%”, indicates Jérémy Schorr. Finally, keep in mind that the management fees of the envelope will eat into the return of the funds. Thus a product with a rate of 4.50% housed in a contract with 1% annual fees will only earn you 3.50%.
Alongside these inconveniences, life insurance retains weighty assets, starting with its tax framework. As long as the savings are not withdrawn, you escape any taxation. You also benefit from its advantageous inheritance framework. Second key advantage: liquidity. If you wish to resell your shares, whether to recover your capital or invest in another investment, the insurer guarantees that you can do so, even if there is no buyer opposite. Quality as the market hardens. Finally, the subscription costs are slightly lower and the period of enjoyment is shortened. Between the advantages and the disadvantages, it’s up to you to see which way the balance tilts.