How to Start Investing in Rent?
You already own your main residence and are now going to invest in rental. To be successful with this real estate project, you must first determine your goals, pay special attention to taxes and carefully select your prospective tenant.
So how do you get off to a good start with rental investment? Real Estate Secrets gives you some advice.
- Determine your goals to get started with real estate investing
- Consider Taxes Before Starting a Rental Investment
- Before starting your rental investment, ask yourself what your debt capacity is
- Ask yourself what type of loan you need to take out to get started with real estate investing
- Choose between basic rent and furnished rental before starting a rental investment
Determine your goals to get started with real estate investing
Before starting your real estate investment, you need to develop your investor profile and define your goals. If you don't know anything about this field, real estate education can be a good idea to better master the concepts and outlines.
Ask yourself questions about your investment strategy. Do you want to acquire a property to get the maximum return?
Build an inheritance to pass on to your long-term heirs? The answers to these questions enable you to refine your project and thus choose a home, a type of rental and an appropriate tax arrangement.
Consider Taxes Before Starting a Rental Investment
The return on your rental investment will necessarily be affected by taxes, as the rental income generated is taxed by the tax authorities. You have two options at your disposal: the micro control and the real control.
There are two types of micro-packages, depending on whether you opt for an empty rental or a cost-effective furnished rental.
They can be configured if the rental income does not exceed 15,000 euros, they do not allow you to deduct your expenses, but they offer you a bonus. This is 30% basic rental, 50% furnished rental and 71% furnished tourist accommodation.
Starting a rental investment is particularly interesting because it allows you to deduct fees from your real estate income (vacant rent) or from your BIC (furnished rent). In this way, loan interest, costs of co-ownership, insurance premiums, etc. can be charged.
If your expenses exceed your income, you create a capital shortfall, which you can transfer to your ordinary income or to income in the same category.
So the real plan will be adjusted if your expenses exceed the micro plan rebates or if you are heavily taxed.
It is impossible to talk about property taxes without addressing the issue of tax exemption arrangements.
You have forcibly understood the speaker of the most famous among eux, Pinel loi, more consciously than there are others, such as the Denormandie apparatus (Pinel ancien), the Malraux loi, the Censi-Bouvard apparatus or defiscalization of historical monuments All offer you a tax credit, which can be an interesting leverage to increase the return on your rental investment.
Before starting your rental investment, ask yourself what your debt capacity is
The borrowing capacity for a rental investment is the maximum amount that the bank will lend you in relation to your income, your expenses and your contribution.
Your monthly installments must be adjusted so that they do not exceed a debt ratio of 35%.
With regard to the savings to be added to your project, keep in mind that it is possible to borrow without a contribution to finance a rental investment, but in this case it will be more difficult for you to achieve it strive to self-finance your investment.
Once you know the maximum amount you can borrow, you can determine the size of your investment. Purchase of a two-room apartment, investment in a housing association for students, purchase of a ground floor apartment for the elderly or disabled and families with small children...
Ask yourself what type of loan you need to take out to get started with real estate investing
You can choose between a repayment loan and an in-fine loan to finance the purchase of real estate.
The repayment loan consists of the monthly repayment of part of the loan capital. The amortization system means that at the beginning of the payment, you pay a greater portion of the interest than the principal, and then the situation is reversed.
It is possible to defer the repayment of an amortizing loan, which allows you to optimize the cash flow of your investment, for example time to do work on the property before renting it.
The fine loan works differently. This is because the capital is repaid in one go on the maturity date. The other monthly charges consist solely of interest.
This type of loan has a tax advantage: the fact that you can deduct more interest during the entire repayment term.
Choose between basic rent and furnished rental before starting a rental investment
In the event of vacancy, you agree to a minimum rental period of 3 years. In general, tenants stay longer in this type of home, which they can furnish and furnish as they see fit. The turnover and the risk of rental income are therefore limited.
However, the discount in the micro-scheme is less generous than with furnished rental, and the deductible costs in the real-world arrangement have been exhaustively worked out by law.
In furnished rental you mainly attract students, people in professional mobility and young employees. The rent can vary from 1 month mobility rent to 1 year for classic furniture, up to 9 months if it is celebrated with a student.
You can choose from two statuses: Professional Furniture Rental Company (LMNP) or Professional Furniture Rental Company. Advantage is that they allow you to practice depreciation in LMNP as in LMP in addition to deducting expenses.
In addition, the costs that are allowed as deductions are not exhaustively listed by law. In the LMP, the land shortage is attributable to world income and can be carried forward for 6 years.
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