Real estate: main residence or rental investment, where should you invest?

“Before choosing the city where to invest, the first question to ask is: what is my medium or long term goal vis-à-vis the good that I am going to buy? In other words, is it a heritage investment in the sense that I aspire to one day live in this accommodation, or even to house one of my relatives, or rather a purely financial investment where only profitability matters ” , insists Brice Cardi, president of the L’Adresse network.

Evacuate affect

While, in the first case, the affect as to the municipality to be privileged occupies an essential place in the decision-making process, in the second, on the other hand, it is absolutely not taken into account under penalty of vowing from the Leaving this real estate operation to failure, warns Anthony Guérin, associate director of the Groupe Quintésens Pays Basque, a company specializing in wealth management. “As soon as the individual places himself solely in the perspective of a lessor investor, he should not ask himself whether or not he likes the city in which he will position himself. It is not, in fact, because one appreciates oneself a municipality that it is necessarily profitable. “

So beware of buying a favorite for a good but especially for the city where it is located, continues Brice Cardi. “We must first ensure that the latter is of interest in terms of the rental market. Otherwise, the accommodation may be difficult to rent and the yield almost zero. “

Hence the importance of carefully studying local rental demand in order to minimize the risk of vacancy. For if the future profitability of a property certainly depends on its initial purchase price as well as the amount of rent claimed, it also varies enormously depending on its occupancy rate. Consequence, explains Michel Lechenault, editorial director of the SeLoger group, “One of the keys to optimizing your investment is to target municipalities whose property prices are still low, but where the risk-return balance is balanced”.

Beware of theoretical profitability

In other words, cities that are still affordable to buy, but where there is an imbalance between supply and demand for rental. “On paper, certain cities seem particularly attractive in terms of profitability, like, for example, Saint-Etienne where gross yields can reach up to 9%. About 5% more than in Paris. However, while it is very easy and quick to rent your property in the capital, it turns out to be much more complicated in Saint-Etienne. However, each month that passes without a tenant decreases the resulting yield all the more ”, analyzes Michel Lechenault. Thus, a recent study of the MeilleurAgents site devoted to cities where it is good to invest shows that certain municipalities among those serving the highest yields (beyond 8.5%) such as Béziers, Bourges, Limoges, Mulhouse or Sarcelles also have the highest rental risks.

If the tension existing between rental supply and demand therefore constitutes an important selection criterion when selecting the city to invest in, the very nature of this demand is just as fundamental. Reason? When thinking about real estate investment, one of the first reflexes is, as a general rule, to turn to small areas by imagining renting your property to a student clientele. However, recalls Brice Cardi, “Targeting a municipality by focusing only on the university campuses available to it is a strategy which can certainly prove to be profitable, but which nevertheless amounts to voluntarily restricting the pool of its potential tenants as well as that of its potential buyers at the time of resale “. To put the odds on its side, it is better to turn to an agglomeration that combines employment and student pool. “We must, in fact, favor cities that combine demographic growth and growth through employment, because the more profiles likely to be interested in your property, the easier it is to rent it”, underlines Anthony Guérin.

Office property: a leading indicator

Another important precaution to take when making your choice: do not focus on the largest cities in France or, at least, their center. On the contrary, emphasizes Michel Lechenault. “It is often more interesting to opt for a municipality in the making situated on the outskirts of large metropolitan areas. “ An opinion shared by Anthony Guérin for whom these cities represent today, in terms of price, a market of deferral for the candidates with the hiring as well as those with the purchase. Provided, however, that they are well connected to their “mother metropolis” or that they will become so in the near future, thanks to the development of the public transport network, like several municipalities in Greater Paris.

But the criterion of transport is not the only one to play in terms of the attractiveness of a municipality in terms of investment, notes Brice Cardi. “Another good indicator of the health of the urban rental market is, paradoxically, office property. Before deciding on such or such a city, an individual has every interest to look at the evolution of the marketing of workspaces, because that implies the arrival on the spot of new employees who will be brought to find accommodation. “ Be careful, finally, not to give in to the sirens of tax exemption devices via a purchase on plan. Knowing the theoretical development of a municipality is not enough, concludes Anthony Guérin, “You always have to go and feel the city”.