Rental investment in Dordogne
Making a rental investment
A rental investment is a thought-out real estate purchase, level headed and taking into account different criteria than those related to a housing purchase for one’s self. Knowledge of the region, where you want to invest is necessary, already to whether the property will be leased. The Valora Agency agents know the area and can advise you on the best investments to make. Similiarly, they are available to answer any questions you may have regarding this.
The calculation of the profitability of a rental investment, it’s performance, measures the value of investing in a property.
The rental income is the main element of evaluation for an investor before buying a property, the aim being of course to invest one’s money wisely. The performance of an investment is stated as a percentage of the amount invested. The calculation of the rental income is simply to evaluate how much a property can bring in relative to it’s purchase price and expenses incurred.
We can inform you on the different possibilities available and the profitability of the properties that interest you.
Calculating the rental profitability
Here, it is about calculating the profit in terms of rent over a year and relate it to the cost of purchase. For example, if the monthly rent is 500€ and the purchase price is 100 000€ with agency and notary fees of 15 000€. The rents over a year, without charges, amount to 6000€ and the total purchase price is 115 000€.
Gross rental profitability = annual rent / total purchase price x 100
In our example the profitability would be 6000 / 115 000 x 100 = 5,22%
But the gross profitability does not give a global view of the actual gain. For this, you must calculate the net profit, taking into account all the expenses incurred by the property :
This is a non exhaustive list and will vary in each situation. To calculate the net profitability, you must subtract these expenses from the rental income
Net rental profitability before income taxes = (annual rent - various expenses) x 100
Furthermore, you must take into account your home owner’s taxes and possible tax exemptions. Indeed, a rental investment is subject to various taxes but it also allows for reductions or tax credits according to the type of purchase you make.
The Valora Agency also puts a your disposal a rental management service which takes care of everything from finding a tenant to appeals and revision of rent and the daily management of your property. You can entrust your property in complete peace knowing that we take care of everything and at a low cost to you. Indeed, you will have to bear only cost of the fees related to finding a tenant which are split between you and the new tenant and the management fees are charged to the tenant directly (these being included in the rent). We make a monthly transfer to your account of the balance of the rent.
In addition, we are the main contact for the tenants, an intermediary that saves you the daily hassle of managing your property. For further details on management, we will need to consider the amount of the rent. We also offer the opportunity to subscibe to an unpaid rent insurance. Indeed, despite all precautions, unpaid rent are amoung the risks of a rental investment. For this reason, it is sometimes wise to hedge against this possibility.
We are at your disposal to answer any questions you may have regarding rental management.