Property Investment

SIMPLIFIED CASE STUDY:

Acquisition of a 2 Bedroom Apartment: 68 m2 with terrace, garden and parking for a price of 295 000 €

• Monthly rental income (Pinel) of 916 € (inc. parking),

• Monthly income tax reduction of 492€ for the first 9 years, then 246 € monthly for 10 to 12 years. A tax reduction of 61 950 € over 12 years,

• With a 20-year mortgage at the rate of 1.9%; the monthly repayment is €1478,

• Monthly savings of:

• 70 € per month for the first 9 years,
• 316 € per month during 10 to 12 years,
• 562 € per month in the last 8 years.

At the end of the 20 years:

• The credit is reimbursed,

• You own a property with an estimated average value of 317 886 €,

• Your savings effort was 72 485 € over 20 years. You only paid 24.5% of the value of the property,

• Your financial gain, can be estimated at 245 401 €,

• Annual return on investment 16.9%.

PINEL CHARACTERISTICS:

• Tax reduction of 63 000 € over 12 years, or 54 000 € over 9 years or 36 000 € over 6 years,
• The maximum ceiling of investment per year is 300 000 €,
• The maximum price per square meter estimated is of 5 500 €,
• The choice regarding the contractual rental period is 6, 9 or 12 years,
• The price of rent per square meter depends on the geographical area in which the property is classified. In the “Alpes Maritimes” rent is set at 12, 5 € per square meter in 2017,
• Collected rent depends on the rate of taxation of your income,
• The tenant’s income is capped at 36 993 € for a single person, and 55 287 € for a couple (in the “Alpes Maritimes”),
• You can rent to family members; ascendants or descendants.

In order to efficiently structure investment in a rental real estate within the Pinel plan, Fraselle Consultants advises you:

• On selecting the property, the building promoter's quality & reputation, the location, the purchase price, the expected level of rental demand, the proportion rental/Pinel apartments to those occupied by owners, ...
• And, once the real estate is optioned, to establish the true cost of the transaction in order to accurately predict the long term expenses for which to budget.

COLLECTIVE REAL ESTATE: WHAT ARE THE DIFFERENCES?  WHAT ARE THE BENEFITS?

Instead of physical ‘bricks & mortar’ real estate investments, you can instead chose to invest in collective real estate via the ‘société civile de placement immobilier (SCPI)’ generally called « pierre-papier » These are property investment shares; literally translated as « paper-bricks ».

The SCPI collects funds from savers (the associates) and selects, buys and takes care of real estate &/or rented assets. Thus, the savers/associates get shares from the SPCI and then receive income from rent.

Collective real estate investment presents several advantages:

• Accessibility; it allows investing indirectly in real estate without mobilizing large sums of capital,
• It’s a simple form of acquisition, with less paperwork,
• Spreads the risk; the SCPI invests in very different properties, in different areas and with various types of tenant,
• Opportunity to invest offices and commercial real estate that is not easily accessible to an individual investor. The SCPI allows access to a class of asset which has a different economic context from that of residential property,
• Outsourcing of rental management; there are no property management worries.

Fraselle Consultants selects the best performing SCPI, OCPI and/or SCI on the market. « Paper-bricks » or « pierre-papier » can be financed by cash or credit or in the wrapper of the Assurance Vie i.e. Life Assurance

By buying « paper-bricks » you can indirectly access real estate investment thereby diversifying your portfolio.