- Suitable for investors who want to secure a return on the property and take advantage of good capital gains.
- Advantages: easy to exit the lease contract and sell the property, maximize capital gains, no furniture to buy,
- Inconvenient: you cannot enjoy the property because of long term let, you pay the 19.6% Vat, and the return is not guaranteed as a leaseback property but only secured (first tenant offered and insurances to cover unpaid rents, damages, and periods between two tenants).
What are the best areas to invest in buy-to-let in France and what are the criteria you should target?
In order to reach a good return on the property we always select the new developments around medium size cities and towns where people aim to live for the quality of life and where it is easy to find a job. For example Nantes, Rennes, Vannes for west of France are the most dynamic cities. We rarely select development in city centre as price per square meter is already too high and the return will be close to 3% only with less potential capital gains.
So we select developments where population grows rapidly and prefer property in suburb or in a range of 20km from the city with easy access.
Which criteria do we target ?
- In term of prices per square meter we do not propose any property with a price per square meter above 3.500 €, vat included.
- When exceptionally we propose properties with a price per square meter above 3.500€, we justify with an exceptional location (Megève, Saint Tropez) or exceptional quality, equipment and features (luxury furniture, huge terrace with sea view, heated pool and quality fitness centre).
- The net return (net of management fees and insurances) you should target should be between 5.0% and 5.6% for a studio and one bed and between 3.8% and 4.5% for a 2 bed apartment.
What has to be paid by the tenant and by the owner ?
- Council tax once a year
- Management fees of syndic, administration expenses and if necessary lawyer and architect fees...
- Insurance of the building
- Heating expenses (maintenance)
- Insurance of the building
- Heating expenses (maintenance)
- Expenses for TV and satellite cabling
- Wages and salary of "concierge"
- Gardening : trees, plants.
- Lift maintenance
- All taxes except council tax
- Heating, hot water, maintenance
- Water
- Salary of people cleaning the building
- Electricity for communal areas
- Electricity for communal areas Maintenance security
- Maintenance of electric gate
- Maintenance and small repairs of the building
- Products for cleaning the building
- Lift : electricity and max 73% of maintenance
- All expenses of gardening
All expenses due by the tenant are paid on a monthly basis.
Repairs
- All important repairs such as new heating system, new windows, roof maintenance.
- Small repairs and maintenance of all equipment in the kitchen
- Small repairs inside the apartment such as painting, wall paper
- Cleaning the apartment
How secured is the return ?
- Management fees include insurance to cover any risk of non payment of the rent
- Management fees include insurance to cover any damage from the tenant,
- Management fees include insurance to cover the vacant period between 2 tenants
- We select the tenant according to very strict criteria of solvency, job experience, reference letter,
- We asks for 2 months deposit in order to cover any delay of payment and damages,
- First tenant is offered.
