Where should I be investing in real estate in 2019? That is the first question investors ask. You can forget that cute little town just next to where you live! For buy-to-let investments, flourishing cities are “where it’s at”. Ignore this advice at your peril with the risk of your investment proving a complete failure…
Choosing the easy option is a mistake
Investing in a market you are familiar with, near your family or near where you live is obviously less daunting: you, or someone you know, can go and visit properties before buying one, maybe meet with potential tenants, be available in person in the event of problems, etc. That may be the case, but it is important to remember that the ultimate objective of a buy-to-rent investment is profitability.
On that basis, investing in a small (or even medium-sized) town you know inside-out is far from the wisest choice. It is those periods where an owner has problems finding tenants and their property remains empty, that have an impact on yield, the risk being an unprofitable investment due to lack of rental demand. This criteria is even more important than the level of rent you hope to obtain for the property, which usually correlates to the value of the property and therefore its purchase price.
Beware of your property remaining empty
In smaller communes, there is a higher risk of a property remaining empty for a while between tenants. And that “while” will also last longer, studies have shown. It is in attractive, thriving cities that buy-to-let investments are both sounder and more profitable. A small studio apartment served by public transportation is bound to find a taker in Bordeaux, a city that hosts tens of thousands of students (and their population is growing!). The chances are that a beautiful apartment in Lyon will catch the eye of young couples.
A major city with a dynamic reputation that attracts professionals and students is the ideal location for investing. It is not just raw statistics that count either, trends should also be taken into consideration. If pressure to find rentals is strong and rising, indicators are green for go ahead! How can you be sure? Purists will take it upon themselves to study statistical data (INSEE’s regional comparison tool is ideal), others will rely on indexes that summarise the data, or the numerous tables that classify cities in order of attractiveness and the profitability of investments.
The best opportunities are to be found in Paris, Bordeaux and Lyon
No great surprises these past few years: Paris, Bordeaux and Lyon are the leading three cities for investments, and that will not change any time soon. That is why My Expat has chosen to focus on those three cities, which are the most “solid” for buy-to-rent investments. They have the “whole package”: already high and increasing populations, dynamic pools of labour, an appealing brand image and popularity ratings that are on the up, masses of tourists, a growing number of students, good domestic and international air links.
There is a flip side to all this, though. Paris, Bordeaux and Lyon are highly coveted and market pace is (even) quicker there than elsewhere. Properties coming onto the market are sold within a few days, sometimes within a few hours even. To have any chance of investing in those cities, being there is vital, knowing the local market is essential, daily scrutiny of what is available and being ultra responsive when an opportunity comes up is a must. If you want to invest in a sound and profitable property, consider enlisting help and assistance