Investing in rental real estate consists in buying a property to rent it out with the aim of building up a patrimony. But concretely, why invest in this field? What are the advantages and how to realize this project? Here are some elements that you should take into consideration:
Simplified investments thanks to the Pinel law
With the Pinel law, formerly known as the Duflot system, financing your new rental investments really becomes easier. You have the possibility to acquire a dwelling to rent with a view to becoming an owner without any contribution.
Thanks to this system, many investors have been able to start and invest in rental real estate. Moreover, the Pinel system allows you to take advantage of a tax exemption of up to 21%. Whatever your tax bracket, you can benefit from a tax reduction on the cost price of the property.
To build up your assets
Investing in rental real estate helps you to obtain stable additional income over the long term. You can therefore build up your assets gradually and prepare for your retirement. You also have the opportunity to protect your descendants or relatives.
You can finance your property without any personal contribution. Moreover, the financing of your acquisition can be carried out with a real estate loan. The latter will be reimbursed in large part by the rents collected as well as tax exemption.
Calculate the profitability of your investments
Wondering if investing in real estate is profitable? You can calculate its profitability. First of all, know that there are 3 types of profitability: gross, net of charges and net.
The gross profitability is the sum of the rents received without deduction of charges. You must divide the annual rent by the purchase price of the property and multiply it by 100 to calculate it.
The profitability net of charges is the gross profitability with the property tax and charges less. You will subtract the charges and property tax from the rent per year, divide them by the purchase price of the property and multiply by 100 to calculate it.
Finally, the calculation of the net profitability is the most difficult. It is necessary to consider the profits obtained after tax with the net profitability of charges and the tax reduction. It is also necessary to consider the potential rehabilitation works which, however, vary according to the taxation of the investor.