Investment in rental real estate in 2020: good or bad idea?

Are you planning to start a real estate project this year? Follow our advice to make your rental investment a success.

The year 2019 was marked by records with more than one million real estate transactions recorded. This dynamic market was driven by historically low-interest rates. Rental investment is rising sharply in a tense social context with the implementation of the pension reform. Should we be investing in stone in 2020? Answers.

Good reasons to invest in real estate in 2020

If you want to build up your assets without taking too much capital risk, the rental investment may be the solution for you. Indeed, in the long term, real estate remains the investment with the lowest risk, provided you choose your property carefully. Today, many French people are turning to this solution to prepare for their retirement. The latest events in France should further support this trend.

The other advantage of this investment is the possibility of borrowing funds in the absence of the necessary liquidity. In most cases, it is even advisable to take out a loan to finance the acquisition of the property and take advantage of advantageous conditions.

Within the framework of this investment, the monthly credit installments are partly reimbursed by the collected rents, thus limiting your saving effort. The operation is also interesting from a tax point of view since the loan interest is deductible from the property income.

Investing in seasonal rentals, bare or furnished

Several formulas allow you to rent your home on the market. Tourist or seasonal rental refers to accommodation rented for short periods, usually during vacations. The profitability of a seasonal rental is often more interesting than that of a long-term rental because the rents are higher. On the other hand, the costs associated with this type of rental can be significant (cleaning costs, concierge fees, electricity and heating bills, etc.). In the case of a long-term rental, the owner can charge the tenant for water, heating, and electricity consumption and even part of the condominium charges. Therefore, the choice of the rental method depends essentially on the length of time you are prepared to commit to.

In which city should you invest in 2020?

The latest LPI-Se Logger barometer lists the 5 cities with more than 150,000 inhabitants in which prices are falling but rents are rising. In Bordeaux, for example, housing prices fell 0.2% over one year while rents rose 3.7% over the same period. In Limoges, selling prices fell by 3.3% and rents rose by 2.4%, making it a particularly attractive city in which to invest. Nîmes, Orléans, and Toulon are also among the most profitable cities, according to LPI-Se Logger. Nevertheless, rental periods vary 16 days in Bordeaux, 48 days in Orleans, 62 days in Toulon, 71 days in Nîmes, and 76 days in Limoges.

 

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