PROPERTY: Buy to let and make a successful investment

Investment in bricks is all the more profitable as it becomes lucrative. To do this, you have to consider many parameters before buying a rental property.

After considering the state of the local real estate market (price per square meter, property tax, median rents...), it is essential to anticipate the purpose of the acquisition. The location of the property is chosen according to the objective set: an economically dynamic area for an unfurnished family home rental, a university town for a furnished student rental, a highly touristic city for a vacation rental. It is then necessary to calculate the rental rate of return on the property. What type of property is most in demand? To whom will I rent? What are the prices charged? What could my profit margin be? These are all questions that must be answered before investing.

The property purchase, whatever it may be, makes possible to build up a patrimony, an investment whose profits vary according to the type of rental applied. In France for example, while traditional lettings provide a sustainable rent and allow you to benefit from the provisions of the Pinel Law* (purchase in new buildings) or the Malraux Law** (purchase of housing to renovate), seasonal rental is just as interesting.

As with a traditional rental, it is important to study the local market and observe the prices in the surrounding area. Similarly, it is necessary to assess the rental profitability of the property. To obtain an estimate of the gross annual profit of your seasonal rental, simply divide the expected gross annual income by the estimated total price of the property and multiply the result by 100. Example for a property worth €350,000 rented for 20 weeks at an average weekly price of €800: the estimated gross rate of return is 4.57%.

Another positive point of holiday rental in France: it is not subject to the same tax laws as traditional rental. Thus, income from a "tourism furnished", which falls under the category "Independent and Commercial Profits" (BIC), qualifies for the flat-rate micro-BIC scheme. In other words, for an annual income of less than €81,500, the lessor benefits from a 71% tax deduction on his taxable income. No rent fixing, no minimum contract period, a simplified situation to face bad payers... Renting a house or apartment to holidaymakers can be an excellent investment.

* Under certain conditions, up to 21% tax reduction in 12 years in Metropolitan France and up to 32% in 12 years in Overseas France.

** In the case of a rental investment, the Malraux law gives the right to a tax reduction of up to 30% of the amount of the restoration work.