Finance your retirement with real estate investment

Your retirement is fast approaching but you haven't saved enough? Fortunately, it's never too late to prepare for your retirement. Real estate investment is a preferred solution to finance your retirement.

Thanks to the rents collected, real estate generates regular cash inflows. It is an appreciable complement to maintain its standard of living after 60. Many seniors rely on stone to supplement their pension.

Discover in this article how to take advantage of real estate to calmly finance your retirement. We will review the different types of investments to be preferred. We will also address the issue of debt and taxation.

Follow the guide! It's never too late to properly prepare for retirement. But before we start, here's How can you better finance your future retirement?

 Let's go !!

🌿 What is a real estate investment?

A real estate investment consists of buying real estate with a view to heritage and financial return. There are different ways to make this type of investment.

The most classic is the purchase of an apartment or a house to rent it out. The investor then receives monthly rental income corresponding to the rent, from which the charges inherent in the property must be deducted. The objective is to uncover an annual return thanks to the rents collected.

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You can also buy a property in the goal of reselling it a few years later by realizing added value. This capital gain comes either from the rise in the real estate market, or from a revaluation of the property after improvement work carried out by the investor.

Whatever the strategy, real estate investment must think about the long term. Diversification is also recommended so as not to concentrate all the risks on the same property.

🌿 Invest in a larger primary residence

The main residence must be spacious enough to be partly re-rented once you retire. Think about it before buying or building.

Prefer a house with an independent annex or a large apartment with two separate bedrooms. You can then rent out part of the property to generate income. It is easier to rent to a single person than to a family.

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Aim for a central, well-connected location to make renting easier. Good insulation, low charges, parking: the apartment must be functional to attract tenants.

Un furnished lease is more profitable than an empty rental. Provide quality furniture and equipment.

Seasonal rental in summer, student lease, subletting of a room: multiply the possibilities of additional income.

Anticipate any work to facilitate cohabitation and rental. An apartment that is too cramped or dilapidated will be difficult to rent.

🌿 Acquire a rental property to finance your retirement

Buying a house intended exclusively for rental is a good investment to finance your retirement. The rents collected constitute significant additional income once you retire.

To optimize placement:

• Prefer a small property that is easy to rent : studio, two rooms, modest apartment. Rents will be higher per m2.
• Aim for a strategic location : near university, city center, metro, shops. Rental demand will be significant.
• do some work to modernize the accommodation before renting it out: parquet, electricity, bathroom.
• Equip at least: bedding, hotplates, refrigerator. This facilitates more profitable furnished rentals.
• Bet on the advantageous taxation of the LMNP (Non-Professional Furnished Rental Company). Possible tax exemption.
• Keep precautionary savings for contingencies: urgent work, vacation rentals, unpaid bills.

If you already own a property, also consider renting it out after you retire. The rents will generate a significant supplement.

🌿 Place your savings in SCPI

Another way to finance your retirement is to make SCPI investments. SCPIs (Civil Real Estate Investment Companies) allow to invest in rental real estate in a simple way.

We buy SCPI shares which give the right to a share of the rents collected on a fleet of properties managed by professionals.

Choose an SCPI invested in residential real estate. Aim for a net yield of 4 to 5% to generate comfortable additional income.

You can also opt for real estate life insurance. We invest in units of account backed by SCPIs, with the advantages of life insurance: exit in annuity or capital of your choice.

In reality, SCPIs are the easiest real estate investment to manage to supplement your retirement income without worry.

🌿 Bet on the life annuity

The life annuity is a clever financial and real estate arrangement that allows an elderly person, the seller, to sell their property (house, apartment, land, etc.) while retaining the right to live there until their death. This technique also allows you to finance your retirement with ease.

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The buyer immediately pays an amount called “bouquet” which represents only part of the sale price, usually between 10% and 30%. The rest of the price is paid in the form of “life annuity” paid periodically to the seller during his lifetime.

The buyer will only have full ownership of the property upon the death of the seller, of whom he is only the bare owner in the meantime. The price depends on the age of the seller and therefore on his estimated life expectancy.

The life annuity is therefore a real estate investment at a lower cost for the buyer but risky if he is wrong about the remaining life of the occupying seller.

The advantages of life annuity for retirement:

• discounted price, making it possible to invest in a beautiful property. Up to -50% of the market price.
• Possible income if the occupant accepts a partial sublet.
• Advantageous taxation : no taxable capital gain on the death of the occupant.
• Return on investment on death if resale of the property or rental.

Choose your life annuity carefully: in the right location, occupant not too old, precise medical expertise. A clever arrangement to invest in stone when there is a lack of contribution.

🌿 Use mortgage

To build up a rental portfolio, do not hesitate to use a mortgage, even close to retirement. Borrowing remains attractive given the current low rates.

As advice, limit the amount borrowed at a maximum of 50% of the value property to facilitate obtaining the loan. Negotiate a credit over 15 years maximum. The ideal is to repay it before you retire.

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Prefer a fixed rate to avoid rising rates. Even if it means paying a little more.  Opt for the cheapest borrower insurance, your age does not matter. Choose constant monthly payments : no surprise or snowball effect.

Negotiate the consideration of rents in the calculation of your debt ratio. Amortize the capital more quickly if possible thanks to the rents collected.

Attention, the loan must remain sustainable after retirement. Your future rental income will need to cover monthly payments and fees. Estimate your budget very carefully.

🌿 Closing

Thanks to rental investment, you can ensure comfortable additional income for your retirement. Several options are available to you depending on your budget and your temperament.

Renting part of your main residence is the simplest solution. The pure purchase of a rental property is more profitable but requires more rigorous monitoring. SCPIs make it possible to invest passively via professionals. The life annuity and the mortgage are to be studied according to your situation.

Whatever option you choose, plan your project carefully. Carefully analyze all aspects: taxation, profitability, future charges, rental risks, possible resale. Call on a real estate consultant to guide you. Get in touch .

But before you leave, here is How to Create an Irresistible Business Offer