five rules to follow for a successful investment – ​​L’Express

Even if new construction allows for a “turnkey” investment, the rise in the price of land and materials has considerably increased construction costs. In most large cities, the price of new construction is close to, or even exceeds, the ceiling of 5,500 euros per square meter beyond which the Pinel reduction, a tax system dedicated to investment in new construction, no longer applies. Older housing therefore often offers much higher profitability prospects. It also allows you to invest in a central area, popular with tenants, whereas new properties are most of the time located in outlying areas.

Adopt the safest possible strategy and choose an apartment capable of attracting the maximum number of tenants. Avoid top floors without elevators or condominiums with excessive operating costs. To ensure the sustainability of your investment in the long term, also avoid cramped properties. “To rent easily, a studio must be at least 20 square meters, with a shower room and a kitchenette,” says Henry Buzy-Cazaux, president of the Institute of Real Estate Services Management (Imsi). If you have more capital, choose the purchase of a two-room apartment of 30 to 40 m², which could equally interest a student engaged in long studies, a young working person, a couple without children or a senior.

Carry out a field survey beforehand to find out the state of the rental market and the nature of demand in the city where you plan to invest. You will thus avoid buying a studio there if there are already many small spaces or a family apartment in a festive area.

Also check the actual rent level of the targeted location because, from one district to another, the same space sometimes rents between 50 and 100 euros less per month. Also examine the co-ownership charges: the higher they are, the lower the net rent you will receive. Finally, take into account the amount of property tax, because this tax has soared everywhere in France over the last three years and will continue to increase. Be careful, because depending on the type of co-ownership (pre or post-1970 construction), the type of property (house or apartment) and the location, it can vary for the same surface area from simple to… fivefold!

It is because it is complicated to launch a renovation project that most homes to be renovated, particularly in terms of energy, are starting to clog up real estate ad sites. “Since the start of 2023, the slowdown in the market has been much more marked for properties requiring work,” notes Anne Monard Bretin, director of Guy Hoquet L’Immobilière du Plateau, in Lyon. If you set your sights on accommodation of this type, your negotiation margin will therefore be greater, especially if it displays an energy performance diagnosis (DPE) classified G, the worst in the scale. Because many owners of these thermal strainers are in a hurry to sell them before January 1, 2025, the date on which it will be prohibited to rent them as is.

Another advantage: after updating, your accommodation will attract the best applications and you will thus reduce your risk. Pay particular attention to the bathroom and kitchen, which are often the black spots of rental properties. “Tenants attach a lot of importance to these two rooms, which are often dated and old,” warns Nathalie Naccache, director of Keller Williams Fortis Immo in Paris. Finally, from a tax point of view, this work will allow you to benefit from the land deficit mechanism. It allows you to deduct all charges from your property income, and therefore reduce your tax. If your property income is insufficient, the remaining deficit is chargeable to your other income (salaries, pensions, etc.) up to 10,700 euros in the first year, then carried over to property income for ten years. This ceiling rises to 21,400 euros if certain eligible energy work is carried out before December 31, 2025.

The volume of transactions has fallen significantly since January in all major cities, where prices are trending downward. From now on, “only the best located homes and in very good condition are still sold in the high price range,” underlines Clément Chaillet, director of the Guy Hoquet agencies in Bordeaux. However, even if it is not “premium”, an apartment in good condition will rent without problem in a city where rental demand is strong. Also, take an interest in properties that are a little less sought after by buyers of primary residences and negotiate a discount. Be careful, demanding to pay half price doesn’t work! Your proposal must be based on tangible arguments.

To do this, examine recent sales in the sector, listed on the Patrim website, as well as on that of Meilleursagents. The latter also offers a re-evaluated estimate of past transactions based on current market prices. Then, increase or decrease the latter depending on the characteristics of the property because a noisy first floor is worth less than a bright top floor. Finally, calculate all the expenses necessary to rent it (condominium work to be planned and interior renovation). Once these calculations have been made, compare this estimate to the market rent to verify that the gross profitability will be at least 3.5% in the city center and 5% in the outskirts. Please note, this will not always be the case in cities where rent capping applies (Bordeaux, Lille, Lyon, Montpellier, Paris and part of the inner ring, a large part of the Basque Country, etc.).

Real estate remains the most taxed asset, since rental income is taxed with traditional income and is also subject to social security contributions of 17.2%. If the total net value of your real estate assets exceeds 1.3 million euros, you will also be liable for real estate wealth tax (IFI).

To reduce the tax, you can opt for a tax reduction system. There are many, each requiring specific conditions to be put in place. Please note: “For Pinel and Denormandie, the tax reduction falls within the overall cap on tax niches of 10,000 euros per year, so we must be vigilant to not exceed this threshold”, advises Christophe Chaillet, director of the heritage engineering at HSBC Continental Europe. Calculate the fraction of the ceiling of the tax loopholes that you already use if you employ an employee at home, if you provide childcare or if you have invested in other tax-exempt investments. Then check that a new real estate investment will be tax-optimizable. Failing this, you can always opt for Loc’Avantages, which offers significant tax reductions provided you agree to a reduction on your rent. It is also the only system accessible for property that you already own.