Published on : 09 March 20203 min reading time
All about real estate! The sums at stake are substantial, so don’t miss out. Our discourse is not necessarily “mainstream”, but it is objective and you will have a good overview. Whatever your means (financial but also in terms of skills and time available) and according to your tastes and objectives, you will know how you can invest in real estate. And you will have the basics to then devour the best books on real estate investment.
Real estate is one of the few assets that can be acquired on credit, and there lies its main interest. Because to build and develop your assets, you need to optimize both levers: the capacity to save (to invest in life insurance and the stock market in particular) and the capacity to take on debt (for real estate investment). Thus, when you have little capacity to save, buying your main residence is often the only way to build up your assets. But there are many other real estate investment solutions that we will compare: with credit leverage or not, in active management (classic rental property) or passive management, commercial or residential property.
Comparison of the different ways to invest in real estate
French people who wish to invest in real estate generally think of the classic “hard” rental investment. But there are other solutions for investing in real estate starting with papers and crowdfunding.
All the solutions to invest in real estate
In this table we compare the different solutions for investing in real estate. Thus, you will have a complete vision of real estate and all the criteria to evaluate to invest. In the rest of the article, we develop each investment solution in detail.
There are 3 main families of real estate investment:
- the real estate of enjoyment: principal residence and secondary residence;
- classic rental property: become a lessor for bare or furnished rentals, tax-exempt property in old or new;
- stone-paper real estate: delegate the management, crowdfunding immobilier. It is ideal to diversify and obtain income without managing personally.
Investing in traditional rental property
When you invest in traditional rental real estate, you become a landlord with the resulting responsibilities towards the tenants. And you have rights and duties in relation to the law. You have to invest more and invest yourself. Thus, you are responsible for the purchase of your property, rental management (visits, inventory of fixtures, regularisation of charges, general meetings, etc.), tax declarations, maintenance and works. And the risk (damage, unpaid rents, rental holidays, downturn in the local market) is very concentrated compared to stone-paper, unless it is easy enough to diversify over several buildings.
The field of possibilities is vast: bare or furnished rental? Tax exemption or not? Via a company or in own name? It is necessary to get well informed to realize the best assembly, the most adapted to your situation, because the tax optimization is determining to make your real estate investment profitable.