Investing in property and taking advantage of the rent generated by this purchase has always been a safe bet. But before rushing headlong into the first apartment that comes up for sale, it is best to carefully study the different investment possibilities. What type of property should you choose? A new or old rental property investment? What consequences will result from this choice?
Real estate investment: new or old?
Regardless of the health of the real estate market, city centers will always be popular. They will continually attract tenants, who are primarily looking for proximity to shops and transport. For these geographic areas, very few new apartments are offered, and they are often listed at very high prices. It is then more interesting to make a rental investment in the old, because the purchase cost will be lower even with work.
New programs, on the other hand, are often located in remote locations whose future is unknown. This type of investment is a bet on the future rather than a safe investment.
What property to buy?
Determining the accommodation you want to buy to rent is essential. The property must be well-located, and close to the buyer’s home if work needs to be done.
It is important to know that smaller surfaces, which are less expensive to buy, tend to attract students. The turnover is therefore high, which leads to a need to refresh the accommodation regularly and a frequent search for new tenants.
Two or three-room apartments are mainly aimed at couples, while a larger surface area will interest families who intend to stay for a long time.
Depending on this choice, the amount of investment will be different, as will the type of tenant, whose solvency must be carefully studied before making a decision, to avoid any unpaid rent.
The advantages of old rental investment
When purchasing an old property requiring work, a discount of 7 to 15% may be applied depending on the cost of the renovation. This significant price reduction can easily work to the investor’s advantage if the work is well managed.
A rental investment in an old property in Paris with work can also be very interesting from a tax point of view. Indeed, if you opt for the real regime, the amount of renovations carried out in the accommodation can be deducted from property income, up to a limit of €10,700 per year, which can be carried forward over 10 years.
These works should also be seen as an improvement in the quality of the property, which will increase its resale price. The longer the property remains in the possession of the investor, the lower the capital gains tax will be when it is resold. It is therefore essential to keep it rented out for a certain time before considering putting it back on the real estate market.
Investing in property can be a good solution to increase your income while increasing your real estate assets. Choosing an old property is preferable to maximize the chances of profits, and ensure a safe and sustainable investment.
