How much contribution for a rental investment 2023?
To finance a rental investment, borrowing is always advantageous. Taking out a loan is a winning strategy in terms of profitability and taxation. The rental investment allows to become owner of a real estate more easily.
By making your investment with a personal contribution, you borrow less and over a shorter period. Also, if you have a down payment, it sends a very positive message to banks when you apply for a loan. This shows the good management of your income and therefore increases your creditworthiness with the banking institutions.
The banks are indeed always very demanding on the personal contribution, it is a question of security for them. They usually require that you have a deposit of 10% to 20% of your property purchase .
Like all investments, real estate investments are not improvised. This is a serious matter that impacts your finances, your assets and your taxes.
The personal contribution for a real estate investment
A personal contribution represents the amount of money a buyer can invest in the purchase of a property. This sum, which you must have before taking out a loan, will make it possible to complete the real estate loan.
Beyond the chances of obtaining a loan for a rental investment more easily, the contribution also makes it possible to obtain better loan conditions.
Within the framework of a real estate purchase, a personal contribution can come from :
- From the Livret A or the Sustainable Development Livret,
- From PEL (Housing Savings Loan),
- From financial investments ,
- From an inheritance,
- From a donation.
The personal contribution makes it possible to cover the expenses relating to the purchase of a real estate: notary, guarantee, guarantee.
A substantial personal contribution allows the borrower's file to be credible, but also to obtain more advantageous loan conditions.
There is no law that states that a personal contribution is mandatory in order to obtain credit. However, you will have to present a solid file to justify this lack of personal contribution.
Rental investment trends in 2023
It is difficult to predict exactly what the trends in rental investment trends for the year 2023 because it will depend on many factors such as
- The evolution of the economy ,
- The interest rates ,
- Government policies.
However, there are some trends that have already begun to emerge or may continue to develop:
- Online rental investment,
- Investment in residential properties,
- The strong demand for low-cost rental housing,
- Investment in retirement and nursing homes.
Online short-term rental management platforms will continue to be popular. They allow investors to earn money by renting their property to travelers.
There could be a strong demand for rental housing, especially in larger cities, as people look to rent rather than buy.
The demand for rental housing may continue to grow due to population growth and the lack of affordable housing. This could result in high returns for investors who choose to rent to moderate-income tenants.
The increase in the elderly population could lead to an increased demand for senior-friendly housing, which could provide attractive investment opportunities.
However, it is important to remember that economic and real estate trends can vary from one region to another. It is advisable to get information and to consult professionals in order to have an analysis adapted to your project and to the concerned geographical area.
Calculate the personal contribution to borrow
The personal contribution required to obtain a real estate loan generally varies between 10% and 20% of the purchase price of the property, but it can vary depending on the bank.
Here is an example to better illustrate this:
- If the purchase price of the property is 100,000 euros, 10% of the contribution corresponds to 10,000 euros.
- If the purchase price of the property is 150,000 euros, 10% of the contribution corresponds to 15,000 euros.
- If the purchase price of the property is 200,000 euros, 10% of the contribution corresponds to 20,000 euros.
Note that the personal contribution can include not only cash, but also other assets such as :
- Savings accounts,
- Life insurance.
It is therefore possible to use existing assets in order to fill the required contribution amount.
To get comparative offers and to choose the one that best suits your financial situation, it is advisable to consult several banks. In addition, it is also possible to consult brokers or credit agencies to get a global view of the available offers.
Does the percentage of contribution vary according to the bank?
For obtain a real estate loan The percentage of contribution required generally varies between 10% and 20% of the purchase price of the property. This percentage varies from bank to bank. Some may require a higher percentage of down payment, especially if the borrower has a poor credit history or if the property is considered high risk.
On the other hand, other banks may accept a lower percentage of contribution if the borrower has a good credit history and a stable income.
There are government programs such as the Prêt à Taux Zéro (PTZ) which allows to finance up to 40 % of the acquisition with 0 % of contribution, it is however subjected to conditions of resources and geographical zones.
The "Prêt à Taux Zéro +" (PTZ+) can be used to obtain an additional interest-free loan to finance the personal contribution.
Note that the percentage of contribution required by a bank may also depend on current interest rates and economic conditions.
Does the contribution percentage vary according to the amount to be borrowed?
It is highly possible that the percentage of contribution required by a bank varies according to the amount to be borrowed. As a general rule, the larger the amount borrowed, the higher the percentage of contribution required. This is due to the fact that banks consider that an investor with a larger personal contribution is more solvent and therefore less risky for them.
In general, for large loan amounts, banks may require a 20% or more down payment. For smaller amounts, they could be satisfied with 10%.
It is important to note that this varies by bank and these policies may change over time.