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Ramneek Sidhu, a real estate Realtor, advises us on a very important topic of how to invest in real estate especially for the beginners. Let’s check the 5 tips from him on real estate investment.
Calculate your profitability for investing in real estate
One of the reasons to invest in real estate is to take advantage of good profitability. Do not rely on gross profitability alone, which is based on the purchase price and the amount of rent.
Prefer net profitability, which includes the taxes you will pay on rental income, property tax or the costs related to the acquisition (notary fees) and the setting up of a mortgage (guarantee fees, application fees, loan interest if you do not opt for the real regime).
Select the right tenant
How to invest in real estate without the operation turning into a fiasco? By rigorously choosing your future tenant. As a lessor, you are slightly exposed to the risk of non-payment, which concerns only 2% of rentals.
However, you might as well limit it, by carefully examining solvency and opting for a candidate on a permanent contract. Also ask for a guarantee instead of unpaid rent insurance.
When asking yourself the question of how to invest in real estate, you had perhaps not thought of the indirect holding of a heritage. For example, you can invest in a performance SCPI, to obtain gains, in a tax SCPI , to be exempt from tax or benefit from a fraction of tax reduction, or even in a capital gain SCPI .
Listen to your feelings, because the risk of damage to the property also exists. If you think the candidate is a party animal, refuse his file!
Consider rental management
Renting involves many time-consuming tasks such as:
- The drafting and publication of real estate advertisements on various sites;
- The pre-selection of candidates;
- The organization of visits;
- The final selection of the tenant;
- The drafting of the lease and the inventory of entry and exit
- The call for rents and charges…
To overcome this constraint, consider rental management . Its cost will not be an obstacle, since the fees of the real estate agency can be deducted from the income at the real regime.
Diversify with stone-paper
When asking yourself the question of how to invest in real estate, you had perhaps not thought of the indirect holding of a heritage. For example, you can invest in a performance SCPI, to obtain gains, in a tax SCPI , to be exempt from tax or benefit from a fraction of tax reduction, or even in a capital gain SCPI .
Other real estate investment alternatives exist such as OPCI shares, real estate crowdfunding , etc. Diversification is the key to limiting risk taking and increasing returns.
Consider starting a company
Keeping the above aspects in mind, start your career in the real estate industry as a company. If you study my progress in the real estate business, I have started as a real estate skip tracing virtual assistant for my real estate clients. And then I started taking interest in understanding and managing deals and was successful in holding this.