The diploma, the first comfortable CDI and presto! Your dreams of ownership resurface. You are looking first to treat yourself to your own cozy nest . And there is the drama: too expensive or too small. But you don’t give up, you want to invest and start building up your wealth. You vaguely hear about rental Real estate companies in Dubai investing as a fallback solution. Qualco? Very simply, it is about buying a property and renting it out, long or short term. Unlike a classic real estate purchase, you do not have to live in it.
Why make a rental investment?
For young workers who live in large cities, buying a primary residence is often the obstacle course because of the high prices. Real estate companies in Dubai investment remains a good way to put your money in stone (even small amounts!), With, if you are successful with your investment, interesting returns. It is also the first step in building up capital and wealth. A useful investment for the future, especially at the time of retirement, even if, yes, we know, retirement is far away when we are under 30 years old.
What are the conditions for investing?
Unfortunately, French banks are very binary: you are on a permanent contract, you can borrow, you are not, it is the cross and the banner. If you are on a fixed-term contract, for example, it is highly preferable to wait until you get your first permanent contract.
Set up a real estate company (SCI)
It is always possible to set up a SCI (Real estate companies in Dubai)
Civil Society) with a member of your family who will “lend” you their CDI. In other words, you will be able to rely on its borrowing capacity to make your loan, via the company. This type of structure also allows you to buy together to join forces with a home with good potential, but too expensive for you alone. “Never forget that we are together for the best, but also for the worse,” recalls Karl Toussaint du Wast, of Netinvestment.com, an investment advice platform.
Then, as with a classic purchase, calculate your borrowing capacity. This is a maximum of 35% of your income . Do not hesitate to use a broker who will help you get the best loans from the banks. Have healthy finances and avoid spending on a whim for a few months: banks look at your accounts before granting you a loan. Bankers appreciate it, ” advises Charles Colas, co-founder of WeMo, a real estate agency. Finally, with the exceptionally low rates and your young age, don’t be afraid to borrow for the long haul!
What taxation for your Real estate companies in Dubai investment?
Choosing the right tax system is PRI-MOR-DIAL. Several options are available to you. Attention, we hang on:
- Invest in a furnished or bare? Fiscally, the State encourages furnished accommodation. The LMNP (non-professional furnished rental company) is the flagship scheme for investors. The furnishings allow to increase the rent by 15 to 20%. In the LMNP, you have two ways to have tax advantages:
– the micro-Bic regime (or flat-rate) : you are only taxed on 50% of the rents received.
– the real regime : often more interesting but more difficult in the calculations. You deduct the charges (management costs, furniture, work, loan interest, condominium charges, etc.) and depreciation (deduct part of the price of the accommodation from your rents) from your income. This device reduces your taxable rental income. It is applied automatically if your rental income exceeds 70,000 euros per year.
If you choose the nude (unfurnished), you will then be under the land tenure regime, with a fixed allowance of 30% or so in real regime, but without being able to practice depreciation.
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New or old? This choice is made according to your risk ratio and your level of involvement.
– Overall, new is easier because it is turnkey. “The notary fees are also lower, around 2%, against 8% in the old one and you have a ten-year guarantee: for ten years, you have no work to plan” , adds Karl Toussaint du Waste. But the new one is more expensive to buy, therefore with a lower yield. If you are under the Panel regime, you have tax advantages for bare rental (over a specific period) but capped rents and a risk of loss on resale.
– The old one is cheaper and leaves the possibility of doing work (deductible from your taxes), which will increase your return and reduce your debt. “Like any investment, the more you take a package, the less profitability you will have. The more we solve the problem, the more output we will have , ” says Charles Colas. Housing is generally better placed, therefore more attractive with less risk of rental vacations. However, be careful with the renovations of condominiums and especially avoid “thermal strainers”, which, in 2023 will be prohibited for rental (first for energy classes G) for lack of compliance.
Or buy ?
The location of your future property is certainly what will take you the most preparation time. Think investor, not with your heart. “You will put all the affect you want for your primary residence. But in rental investment, pragmatic criteria must be applied ” , abounds Karl Toussaint du Wast. Before getting started, you need to know if your product corresponds to a market. In other words, it must be able to be rented.
“We do not start without knowing if there is a rental demand, otherwise it is the insured arrears , ” adds Thierry Signal, the co-founder of Masters, a start-up specializing in rental investment. For the entrepreneur, two means help to ensure demand: rental blood pressure monitors ( example here ), or put “a false advertisement on Leben coin and see if tenants respond,” he continues.
Manage your accommodation yourself or delegate it?
Find the (good) tenants, make the visits for Off Plan Properties in Dubai, manage the unforeseen, take care of the paperwork… Nothing insurmountable, a priori, for an individual, but which requires to put there a minimum. “Delegating your property allows you to be quiet, but you have to see if the cost of delegating is worth the time spent. It’s up to everyone’s appreciation, points out Charles Collas de Welmo. I often recommend starting with yourself, if only to learn and get your hands on. “
It is always easier to be geographically close to your home in the event of a problem. If you are 500 kilometers away, without a trusted person in the city in question, it is better to manage your property. Like everything, it is a trade-off to be made.
If you delegate management, remember that your profitability drops. It takes between 3% and 7% of your rent, tax deductible. You can also subscribe to an unpaid Off Plan Properties in Dubai rent guarantee, around 2%, but then you will not be able to ask your tenant for personal guarantees. It’s one or the other.
It remains to find the manager. You have the choice: real estate agencies, property managers, or PropTech start-ups . The most important thing is the person who will manage your accommodation more than the company itself. Do not hesitate to put them in competition and to increase the number of job interviews. Then all you have to do is collect your rents and fill out your tax notice.
Invest in occupied housing
You can buy an Off Plan Properties in Dubai apartment that has already been rented. The property will then have a change of owner and you inherit the tenant already in place. The advantage is mainly financial, with a purchase discount of 10 to 20%. It is also a way of reassuring your bank: “When there is already a rent paid, we know exactly what the housing earns. You no longer need to present an assessment to your banker, explains Thierry Vagal de Maestros. But you don’t necessarily know which tenant you’re inheriting from. “
