Real estate: investing in occupied housing, a very profitable operation

The real estate crisis is still intense. While prices remain high in many cities and credit terms tensions remain, investors need to be more patient than ever to find the right deal.

Some turn around to energetic sieves that allow you to get discounts 5% to 10%. But this type of operation, which requires a lot of work before giving permission to transfer the rental property, is unfortunately not available to everyone. Another good plan that is still little known, but worth a closer look: investing in houses that are already occupied. These apartments have the double advantage of offering attractive discounts on the purchase, avoiding the need to find a tenant.

Reason #1: Take advantage of cheaper accommodations

According to real estate agents, more and more tenant-occupied properties are being put up for sale on the market: “You have a lot of investors who bought a G-level home 5 or 6 years ago, much earlier Climate Law vote. Today, they find themselves with an energy sieve on their hands that they cannot rent. So they sell it», says Olivier Alonso, president of the Nestenn network of real estate agencies. Interest to Buyers: Showable property 5% to 20% discount compared to the market price or even more if there is a lot of energy renewal work to be done. If there is no rule on the discount, its level depends on the time spent by the tenant in the accommodation. “In cities where rents are not regulated, if the tenant has been in the accommodation for a long time, his rent level is assumed to change faster than market rents. There is therefore a discount to the selling price for the investor», warns Olivier Alonso. Another important factor: when the lease ends. The further you are from this period, the greater the discount.

Reason #2: Get instant rental income

Banks also favor investing in occupied housing, provided that the housing does not cause major problems. With this type of investment, you get immediate rental income. Enough to calm the bank if you buy with the help of a loan. “Let’s state this, however in the real contextonly banks consider it 75% of the rental amount in the criteria for granting or not granting a loan», recalls Stéphane van Huffel, CEO of Netinvestment.

Reason #3: Select tenants more carefully

By investing in homes that are already occupied, you can get much more accurate information about the existing tenant. You can find out from the previous owner about unpaid bills, conflicts with the neighborhood, or whether the accommodation is well maintained. “You can also get a certificate of renter’s insurance that mentions the losses and disputes in the accommodation», explains Éric Allouch, executive director of Era Immobilier France. However, remember to get the previous tenant’s security deposit back, otherwise you will have to pay out of pocket when the tenant moves out. Remember that you cannot ask the existing tenant to provide proof of their employment status or income. You must rely on the documents provided to the previous owner. “You can’t even raise the rent. You are bound to take it under the same conditions as when the lease was signed.», adds Éric Allouch. To renegotiate the lease, It must be notified 6 months in advance until it expires Let’s add that legally it is much more difficult to distinguish of a tenant over 65 years of age and having modest incomes.

Pay attention to the location of the property

Finally, do not forget the basic rules of real estate investment in your selection criteria. Location remains essential, as does co-owner status: “Collecting the minutes of the general assembly, to find out if major renovation works are planned in the co-ownership. Also, remember to contact the town planning department of your town hall to find out if there will be any major projects near the property you invest in.», advises Stéphane Van Huffel.

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