There are several reasons to make a rental investment. However, one cannot help but wonder: how can one invest in such a project? What are the real advantages? Would it really be profitable? All these questions will be answered in this article:
Simplified investment thanks to the Pinel system
It is quite possible to make a rental investment without any contribution with the Pinel device. The latter is a tool created by the State to help individuals to buy a home and become an owner and then put it up for rent. The financing of the rental investment in new property is then simplified and one can at the same time benefit from tax exemption.
The advantages of investing in rental real estate
In addition to the tax exemption granted by the Pinel law, there are other advantages linked to rental investment:
- Supplementing your income: by opting for rental investment without a contribution, you benefit from an investment that guarantees your retirement. Apart from the tax reduction, it is an excellent way to supplement your income on a regular basis. The rents will be used to finance the investment and afterwards, you will ensure the future of your loved ones since you will be able to pass on to them an inheritance;
- Building an estate for your family: investing in rental real estate is a safe investment. What could be better than having a property that will guarantee your family's financial future? Also, the Pinel law allows renting to your children while benefiting from the tax reduction.
It should be noted that the demand for rental property varies from one region to another. Therefore, when deciding to undertake a rental investment, various factors must be taken into consideration. Ideally, you should be able to adapt to the type of available rental you plan to target.
Calculating the profitability of the project
The profit generated by the rents received constitutes the profitability. There are three types of profitability:
- Gross profitability: it corresponds to the totality of the rents received without deducting expenses. To calculate it, the annual rent is divided by the purchase price of the dwelling and then multiplied by 100.
- Net profitability of charges: to obtain it, the property tax and charges are deducted from the gross profitability. To do this, we subtract the charges from the annual rent and then divide the result by the purchase price of the dwelling multiplied by 100.
- Net profitability: it defines the fairest profitability but its calculation is rather difficult. In addition to the net profitability of charges, there are also the profits obtained after taxes which are to be taken into account and of course the tax reduction obtained without forgetting possible rehabilitation works. It should be noted that this rate depends on the investor's tax situation.
Profitability is certainly important, but it is not the only essential criterion for investing in rental property. The other advantages already mentioned are just as fundamental.