Rental investment has always been profitable. However, for some time now, many people have been wondering whether it is still profitable to invest in property with a view to renting it out. With the new rent control law coming into force on August1, this is a legitimate question. What can we expect when the ALUR law comes into force, and how can we continue to make this market profitable?
What does rent control mean?
Only those owners whose properties are managed by professionals are not worried about the possible consequences of the implementation of rent controls. To put an end to this ordeal, the only solution is to entrust your properties to a property management expert (click here to find one).
The arrival of the ALUR (Accès au logement et un Urbanisme rénové - Access to Housing and Renovated Urban Planning) law signals the end of landlord hegemony. They will no longer be the masters of the rent set for their property. This task will be set according to reference rents. These are set by the Observatoire des loyers parisiens or the prefecture. The rent will be determined according to the median rent defined per district per year.
At the very least, it must make 30% less than this reference price, while the maximum ceiling is 20% more than it. However, if you offer a furnished rental, you will benefit from 10% above this maximum limit. The same applies if you're renting out a house or apartment with specific characteristics compared to other properties of the same type in the area.
Tips for keeping rental investment profitable
Despite this impending change, it's still possible to keep rental investment profitable. Before you find out how, read this article about the different types of profitability for this kind of investment. You can, for example, take advantage of a no-money-down investment. This means that you can become the owner of a rental property without having the means to pay for it. In fact, although a down payment is considered a sign of confidence, it is not always necessary to have one in order to obtain a mortgage.
This is perfectly valid in the case of rental investment. The income generated by the rental will be used to repay the loan. In other words, it's self-financing. Loans are easily granted if the investment plan is presented to the banks from the outset. The project must be detailed and concrete. Click here to find out more.
Choosing the right geographical area for a profitable rental investment
It's not enough to present a solid project to the banks to qualify for a mortgage with no down payment. The bank also takes into account the location of the property you wish to buy. In fact, it's an essential criterion for obtaining a loan and making the most of your investment.
For a profitable rental investment, you need to choose :
- A neighborhood in high demand
- An affordable property (studio, two-bedroom or large apartment)
- A safe neighborhood
- A property close to everything (shops, public transport, etc.)
- A house, apartment or studio near a university, hospital or similar institution of interest
Of course, these are not the only criteria to consider when choosing a property to buy to let. The only secret is to select it according to demand and improve it.