Invest in real estate with or without renovation work?

Invest immoInvesting in real estate still remains a refuge for many French people today. However, two situations arise, namely taking accommodation with or without renovation work.

Both cases have certain advantages, but how can you be sure to make the right choice?

We tell you everything in the following article.

  1. Advantages of an investment rental without works
  2. Some disadvantages for an investment without renovation
  3. Advantages of an investment in a rental to renovate
  4. Disadvantages of an investment in a property to renovate

Advantages of an investment rental without renovation work

Quick annuities

Rental accommodation in good condition can always be rented more easily and quickly than a rental to renovate.

The tenant is easier to find: he knows that he can almost come in and put down his suitcase to move in the next hour. For the landlord, it is the opportunity to collect his first rent as soon as the lease is signed. This reassures the owner and allows him to improve his cash flow in order to meet the first repayments of his mortgage or, quite simply, to generate “cash flow” upon acquisition of the property.

Saving time and peace of mind

The other major advantage of investing in new housing is the time saved for both the tenant and the owner. Once the tenant is found, the landlord can focus on other things while keeping his peace of mind.

This is all the more true when the investor buys remotely and does not necessarily have a network of craftsmen in his address book.

Time is a precious commodity and this is all the more so when it comes to real estate investment. By no longer having time to devote to finding a craftsman, making quotes, managing renovations and other work, or choosing materials, not to mention comings and goings on the site, the owner can again focus on new properties to invest.

A reassuring investment for banks

With a property without renovation, rent estimates are always more reliable. Indeed, with this type of accommodation, many real estate agencies can thus define the amount of the rent and establish the necessary certificates for the banks.

For their part, banking institutions can work on concise simulations close to reality, which reassures them to grant a possible loan.

Some disadvantages for an investment without renovation

If there are various advantages, the purchase of a property without work also has its negative sides. First, the purchase price of a property without work is very often more expensive than for a property to be renovated.

The other downside is that the choice of equipment and materials may not be to your liking. The good will then not reflect the idea you had in mind when making this decision.

It may be useful to include in the purchase offer a small envelope which will be dedicated to the valuation of the property thanks to minor renovations.

Advantages of an investment in a rental to renovate

Optimized layout

The first advantage in favor of buying a property to renovate is that it is optimized in its layout and the choice of equipment. Conforming to the tastes of the owner, it can be rented very easily.

By carrying out renovations, the owner makes a clean sweep of the existing to configure the space. Everyone is free to transform the interior in the image of what they want to do with it.

In addition, the owner benefits from the latest standards in terms of electricity, gas, plumbing, heating, enough to ensure lasting comfort for years to come.

The possibility of renting more expensively

With a renovated property, the owner attracts new customers. He can thus count on a rent higher than the average of the market. And if the proletarian has bet on top-of-the-range equipment and services, this is an opportunity to reach a clientele with strong purchasing power, and therefore to offer a higher amount of rent.

The only pitfall to avoid, however, is to fall into oversized and not always necessary renovations. Indeed, their cost then turns out to be unbalanced in relation to future annuities.

The dwelling is valued after renovation work

As soon as a dwelling is renovated, it gains in value. In the event of a possible resale, the owner is sure to realize a capital gain compared to the initial purchase and to find himself in a comfortable position to negotiate.

Here again, buyers will be more numerous and more accessible in the sense that they will know where they are stepping. They will know that there will be no unpleasant surprises regarding possible work.

Optimized taxation

By carrying out work on the newly acquired property, the owner can benefit from tax relief depending on the regime chosen.

If the option chosen is a purchase in his own name in bare rental, the owner can deduct the amount of his renovations from all rental income. And if the amount exceeds the rental income, he can still deduct up to €10,700 from his other taxable income.

Finally, part of the renovations that is not deducted in the year of purchase can be carried over to the next 10 years.

Disadvantages for an investment of a property to renovate

The investment of such a type of housing remains risky, even if one is well surrounded by professionals and craftsmen who can quantify the nature and the amount of the work.

Without counting on the possible disappointment, it is also necessary to take into account the time devoted to the search for these professionals and craftsmen: interior designers, engineers, project managers, masons, kitchen designers, electricians, plumbers, etc.

And the owner is often alone in having to manage the progress and coordination of the various trades. There is not one way easier than the other. However, the landlord must not forget to take into consideration the time and energy to devote to this type of project.

And finally, we must not forget to integrate the fact that the first annuities intervene only after the first monthly repayments, which is why the question of cash must remain at the heart of the concerns. While some see such an option as an opportunity to improve their taxation, others prefer to rethink their assets and adapt them to a new rental investment strategy.