Are you on the lookout for investment opportunities? The idea of investing in short-term furnished rental real estate has been in your head for some time? But in the end, you’re new to it and you don’t know much about it. Like the vast majority of investors, you are determined but not sure where to start. In this article, you answer the questions you ask yourself before you invest.
Is there a good time to invest in short-term rentals?
In reality, it’s all up to you. You do have the answer to that question. You are certainly hearing about the historically low level of real estate rates. Be aware that while rates encourage borrowing and investing, all this is accompanied by very strong demand that pushes house prices to record levels in some areas.
It is your financial situation that will determine for you the ideal time to invest. To lend to you, banks expect you to provide them with solid records and have a good profile. If this means cleaning up your finances for a few months or waiting for the famous CDI or promotion that was in perspective, we recommend that you do what is necessary and put all the chances on your side.
If you want to invest in the rental, it is always advisable to build up a savings beforehand, even if you borrow without contribution. Any investment carries risks even if a successful rental investment is an excellent source of passive income.
What are the advantages of investing in short-term rental real estate?
Real estate, a safe bet
Real estate investment is the assurance of building up a sustainable wealth. It’s a stable investment. It’s a safe way to protect your assets from economic vagaries. Compared to the stock market, the value of a property is more stable over the long term.
Low interest rates make it possible to make the investment profitable more quickly.
A short-term furnished rental investment to prepare for retirement and estate.
At a time when your purchasing power in retirement is likely to be severely reduced, you should look into it and act now to have a quieter retirement. Real estate investment can very well provide a source of income that complements your pensions for a more comfortable retirement. It is also a heritage that you can bequeath later.
What are the benefits to my tax?
Real estate investment can give you tax-exempt schemes. If you are in the real estate information collection phase, you’ve probably heard of The Pinel and Denormandie devices.
Since 2014, the Pinel law has allowed French people to make rental investments in new housing while benefiting from attractive tax cuts.
But there are criteria to be met. To be clear, the property must be new. You must rent the property for a number of years and the price per square metre of the property should not be more than 5,500 euros. On top of that the rent must be reasonable. To learn more, you can do a Pinel simulation online to learn more about eligibility criteria.
The Denormandie scheme is based on the same principles as the Pinel Act, but this time applies to older dwellings. In order for you to enjoy the benefits provided by this law, the property you purchase must meet the eligibility criteria set out by the device. You can find out more about these criteria through specialized articles.
Furnished or empty?
That is the question that many homeowners are asking themselves. From what we know, there are more advantages to furnished rentals.
Today, young people who are moving in for rent prefer to have a house that is directly habitable and functional. They are mobile and do not want to be burdened with expensive furniture whose transport would become a real headache.
In addition, the demand for short-term furnished rentals is real. One might think that the risk of a rental vacancy is higher with a short-term furnished rental, but in the end, there are more potential tenants. They are usually students, single employees, expatriates, long-term employees, or young couples. Some travellers even extend their business trip with a weekend of tourism, the so-called Bleisure. To see examples of potential rents, here is a list of our short-term rentals in Lyon.
It can quite happen that the furniture degrades. During a 2-year rental, anything can happen. That’s why you have to choose a deposit amount that is appropriate for the potential work you can do after each departure.
The short-term furnished rental allows for better profitability.
Don’t forget that by offering furnished housing, you will be able to set a rent 15 to 20% higher and you will of course have demand.
Finally, you can further increase your profitability by choosing the short-term furnished rental. Tenant rotation is of course stronger and requires organization, but profitability is more important. To limit wear, you can prefer to rent furnished in short term from business travelers or executives in mobility.
You must for short-term furnished rental in Paris or in the provinces before obtaining an accreditation number from the city hall, in the cities concerned. If your rental is more than one month, you can opt for a mobility lease.
As we can see, investing in short-term furnished rentals, in a big city like Lyon or Paris for example, can be very profitable.
How do I finance my short-term rental real estate investment?
Home loans remain the most popular way to
There are few real estate purchases of equity these days. And with house prices rising, lending seems to be the most realistic and handy solution.
However, we must not go there empty-handed, as we said earlier. When it comes to an investment, saving is highly valued by banks. Not making a contribution is not inevitable, but it will have an impact on the rates that will be offered to you by the banks. They’ll be higher.
To get the best loan, it is advisable to go through home loan brokers. They have the expertise to compare banks’ offers and get you the best rate. They also negotiate the terms of the loan for you. There are brokers like Pretto who accompany you from the simulation of your home loan, without travel and without commitment, to the signature at the notary.