Investing in real estate requires a strategy to be defined before the purchase. Some real estate investors want to invest in new properties. Indeed, they use the Pinel Law to buy new apartments. They can deduct this investment from their taxes and they build up their wealth.
However, if you are reading this article, it is because you are convinced that buying an old property is a better investment strategy. You know that success in this area is the old. I’m not going to argue with you, because I think like you.
Even if your friends, family or colleagues think you are making a mistake, you are right not to listen to them. For real estate investors who want to succeed, it is imperative that you do not buy new rental property and you will see why in this article.
Table of Contents
- 1- Buy an old property in a suitable location for investment :
- 2- The advantage of investing in old buildings :
1- Buy an old property in a suitable location for investment :
Investing in real estate requires an in-depth market study of the sector. Indeed, if you think you are going to invest in a rental property without knowing the market, you are on the wrong track.
You must study the rental demand of your sector, by putting fake ads on LeBonCoin, for example. This approach allows you to know the rate of prospects interested in your property.
Invest in populated areas :
the population lives in cities. So you’re not going to invest in a home in the countryside, because the French are leaving the countryside for the cities.
Indeed, few people want to live in the middle of the French countryside. Young people come to look for jobs in or around the cities. Working people live close to the cities or within them.
Of course, you will benefit from favorable prices for rental investment, but if you do not find a year-round tenant, there is no point in investing in real estate.
Regarding populated areas, I do not advise investing in large metropolitan areas, because the price to buy an old property is often expensive.
You can prefer rental investments around cities. Choose properties within one hour of the cities. With the development of public transportation, these areas will grow year after year.
The purchase price will be reduced compared to the big cities and you will easily find tenants.
Focus on areas with a growing population :
In my opinion, it is necessary to invest in urban areas close to the French metropolises (up to 1 hour by transport). However, buying an old property around a city that does not attract inhabitants is also a risky bet.
Some cities in France are experiencing negative population growth. Then study the attractiveness of the area. If everything is negative, I think you have to ask yourself whether it is worth investing in that area.
To me, the best way to invest is to focus only on places that are attracting population.
The best way to know is to look at the 5-year demographic change of the city and the area. A city that is attracting new residents is a positive signal, as these newcomers have a direct need for housing by moving.
Now look at urban stimulus plans. Is the city and the region implementing actions to bring in new residents. For example, by building new housing, cultural facilities… With this approach, cities generally intend to increase their population.
2- The advantage of investing in old buildings :
When you want to build your primary residence, it may be wise to invest in new property. On the contrary, when it comes to rental investment, the ideal is to buy an old property.
You do not invest with your heart, you must first think of the rental profitability.
Buying an old property: A less expensive investment :
Real estate investors are constantly looking for properties. They want to increase their rental profitability.
Investing in a new property is too expensive for a rental investment. Indeed, the price is often multiplied by two or three depending on the place of investment. You should never adopt this strategy to invest and hope to generate cash flow (profit) with your real estate.
Some people may tell you that the Pinel law is an investment in new property. Yes, and that is why you should not follow this method. Indeed, even if your purchase will be profitable at the end of your credit, each month you will have to spend money to complete the difference between the rent paid by the tenant and the credit at the bank.
Your goal is to generate income each month after you pay off the loan with the bank.
The works to save time and money :
People who are not experts in rental investment are afraid to invest in properties with work because they think it is too risky. But this is not true.
In fact, doing work is ideal when you want to invest. They will be a lever to defiscalize your investment and pay less taxes and charges during a period. Moreover, they must be included in the real estate credit at the bank.