2023-05-08 03:00:00
Since the start of the Covid-19 crisis, the French have seen their level of savings increase. With inflation and rising interest rates, many people are wondering how to invest in real estate. How to use 50,000 euros in real estate in 2023? By studying the different investment options and the cities where to invest, we answer you in this article.
Borrow with a contribution of 50,000 euros
With 50,000 euros in savings, it is possible to make a rental investment by borrowing from banks. This sum is a excellent record towards financial institutions. Thus, it will be possible to borrow up to 100,000 additional euros, for a total investment of 150,000 euros. However, note that interest rates have increased significantly in recent months, which has an impact on the savings effort required to repay the loan.
The impact of interest rates on the savings effort
With rising interest rates, the savings effort needed to repay a mortgage also increases. For example, for a loan of 100,000 euros, an increase of 1 interest rate point leads to an increase of 100 euros per month in the savings effort. Thus, with rates going from 1% to 3%, the monthly savings effort increases by 200 euros.
This increase in the savings effort can be offset by choosing a adapted rental investmentin particular by favoring furnished rentals rather than bare rentals.
Prioritize furnished rentals
Furnished rentals have several advantages over bare rentals, particularly in terms of taxation. Indeed, the tax regime for furnished rentals is more advantageous, because it allows you to deduct part of the income through depreciation. Thus, taxation on furnished rental income is generally lower than that on bare rental income.
Big differences in savings effort
By comparing the savings effort required for a furnished rental investment and a bare rental investment, we see that the difference is significant. Thus, for a property of 150,000 euros borrowed at a rate of 3%, the monthly savings effort is 155 euros for furnished rentals, against 227 euros for bare rentals. Over a period of 20 years, this represents 18,000 euros in savings for furnished apartments, compared to 57,000 euros for unfurnished apartments. It therefore appears clearly that the furnished rental is more interesting from the point of view of the savings effort.
However, it should be noted that furnished rentals are not suitable for all types of real estate. It is more difficult to rent a large furnished house in a rural area, for example. It is therefore appropriate to give preference to small surfaces in dynamic cities to maximize the chances of success of the furnished rental investment.
The cities where to invest in 2023
Some French cities stand out for their attractiveness for furnished rental investment. It is important to choose a city with a balanced rental voltage, i.e. a supply/demand ratio that favors rental. Here are some examples of cities where it may be interesting to invest in 2023:
- Le Havre: this port city is experiencing renewed attractiveness thanks to its infrastructure and its economic dynamism. Rental demand is strong, especially for small furnished areas.
- Dijon: capital of Burgundy, Dijon benefits from a pleasant living environment and a rich cultural offer. The real estate market there is dynamic, with attractive investment opportunities.
- Aix-en-Provence: located near Marseille, Aix-en-Provence attracts many students and young professionals. Rental demand is strong there, and furnished properties are particularly sought after.
Note that the transport costs to visit a property are deductible from rental income. Thus, an investor can go to Lille, Ajaccio or other cities to make visits and deduct these expenses from his rental income.
Choose dynamic and attractive cities
To effectively use 50,000 euros in real estate in 2023, preference should be given to furnished rental investment in dynamic and attractive cities. With a contribution of 50,000 euros, it is possible to borrow an additional 100,000 euros for a total investment of 150,000 euros. Despite the rise in interest rates, furnished rentals make it possible to limit the savings effort necessary to repay the loan and thus benefit from attractive long-term profitability.
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