For some, rental investment is the Holy Grail of real estate purchases. In addition to providing you with a property, it can also be a source of additional income.
However, this project can be risky because it involves significant amounts of money. Through this article, we give you the keys to successful rental investment even if you are a novice š
1. Research rental investment
One of the first keys is to take an interest in the subject in order to gain a certain mastery of it. By investing in rental property, you will in fact acquire three hats: that of investor, owner, and asset manager. This therefore requires a minimum knowledge of the subject to avoid getting trapped, or even worse, putting yourself in financial difficulty by making bad investments. Don’t worry, however, you don’t need to become an expert on the subject. Simply be curious to understand the basics of rental investment. If you’re reading this article, you’re on the right track!
RentsĀ : what is the current rent level for a specific geography and a specific type of property; what is the underlying trend in rents (increase or decrease);
The different types of housing availableĀ : what are the cheapest, most profitable, most affordable housing options today, etc.?
These three categories are obviously linked and will need to be combined to determine an optimal investment strategy.
2. Be clear about your goals
Another key: you must, before your investment, determine exactly the characteristics of the property you wish to acquire and your investment strategy.
If your objective is to rent out your property and then occupy it in the long term, it goes without saying that you must be more demanding in the choice of the accommodation in question since it is intended to become your home;
If your goal is to rent it out directly and earn maximum additional income, the location of the property plays an important role, as does the condition of the property: a new or recently renovated property will have a significant added value compared to an old property;
If your goal is to resell your property after several years, particularly to make a capital gain, find out about current market dynamics to buy a property whose value will increase substantially in the future.
3. A good location to enhance it
Property location is key when it comes to rental investment. A property located near public transportation, well-known landmarks, or even a university will tend to be more profitable than properties in the suburbs. Indeed, on the one hand, rents are more expensive in city centers and residential areas, and on the other hand, they attract more people, which pushes rents up.
For example, focus on population areas such as the Paris region to maximize your chances of making your investment profitable.
It may therefore be relevant to find out about the geographic market you are targeting, the changes in rents observed in recent years and those anticipated in the coming years, but also about the specific policies and regulations of a city (rent control, for example). In short, you are looking to know if it is the right place to invest.
4. Choose the right type of accommodation
This choice depends on the strategy you set for yourself at the beginning of your project, as we mentioned above. To help you in your approach, ask yourself the following questions:
Small or large?Ā Small spaces are considered more profitable because they generate a higher income in a short period of time, while large spaces (especially houses) are considered less lucrative. On the other hand, the latter provide more security because they are often rented by individuals for a long period, unlike small spaces where tenants regularly follow one another (student housing is the best example);
New or old?Ā New homes can be rented for more, but old homes may have significant renovation potential;
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