Seasonal rental is one of the investments available when it comes to making investments to generate passive income over the long term. This type of investment allows you to make an apartment or a house profitable, especially if it is in a location where there is good tourist activity. It has interesting advantages: high profitability, limited risks, advantageous taxation, etc. But before taking advantage of its advantages, let’s examine what the advantages of vacation rentals are and how to invest effectively.
Why choose seasonal rental?
The first advantage of seasonal rental is that it is subject to a advantageous tax regime, and in particular optimal tax deductions. By owning this type of rental property, you can benefit from the status of Professional Furnished Rental Company with regard to the administration. Thanks to this status, you will be exempt from the IFI (Impôt sur la Fortune Immobilière). Your expenses will be deductible, while your deficits will be deducted from your overall income. With the status of Non-Professional Furnished Rental Company, in the event that your income is less than 23,000 euros per year for example, you will still be able to benefit from other advantages such as deduction of expenses and deficits for example.
Opting for a seasonal rental can be practical, because you will also be able to enjoy your property. The fact that the rental is done periodically (between 1 and 4 weeks) allows you to use it also for your personal needs. Just suspend reservations: but be careful to choose the right moment, otherwise, you will expose yourself to a shortfall.
A vacation rental also exposes you to less risk than in the case of a classic rental. Indeed, the rule for this type of rental is to pay the rent before to invest the place. As a result, you run less risk of being confronted with a non-payment.
One of the biggest advantages of seasonal rental is its profitability. On average, know that a seasonal rental will allow you to earn 2 to 3 times more than a classic rental, especially if it is located in a city or an area with high tourist potential. Bonus, the rent is not framed and there is no minimum contract duration, you are free to set your rates, to attract the desired tenants.
Read also: Seasonal rental: what are the rules to know to avoid penalties?
Invest in seasonal rental
Before committing to a seasonal rental investment and thus generate an interesting passive income for your retirement or to increase your standard of living, here are some tips.
For example, if you want to optimize your investment, you must master your subject On the fingertips. You have the opportunity to train yourself to learn how to grow a short-term real estate investment. Through online training, for example, real estate and tax experts help you calculate your break-even point and generate passive income. Some specialized training sites on this topic also offer free documentary resources.
Choosing the right property to rent out
The first thing to do is to choose the right type of accommodation in which you will invest. In general, seasonal rentals are apartments, or houses, each type of property having its own advantages and disadvantages. The apartment is generally located in the city center or nearby: the rent may be lower, but it also promises more regular rentals, especially if it is close to a train station, for example. As for the house, it is often located on the outskirts or in the suburbs: given the surface area, the rent is often higher than an apartment located in the same area, but the rental can also be for a longer period.
Choose the right location
The true value of a seasonal rental investment is defined by his location. The latter must always be linked to the tourist activity offered in the region.
If customers are looking for an apartment, this often means that they want a location near the city center, well served by public transport, or close to tourist attractions and shops. By choosing a country house, they expect it to be indeed quiet, but close to places of interest: the beach for example, mountain resorts, etc.
For your seasonal rental investment to be successful and generate passive income, you must assess the return you can get from it. The evaluation of rental return is carried out by subtracting the charges and operating costs of your rental (investment in furniture, maintenance, taxes, etc.). You must also take into account in this calculation the price at which you acquired the property, the fixed allowances from which you can benefit as well as the average rental income that you envisage.
The rate of return must be understood between 4 and 10%. Be careful not to underestimate your gross profitability, because this error would not allow you to obtain a loan to finance your project.
Note that the real estate market and the attractiveness of the city also come into play in determining the rental profitability of your investment. It is therefore necessary to analyze these external factors before implementing your project.
It should also be checked whether the local rules decided by the municipality concerning the seasonal rental. Some tourist cities such as Paris or Marseille have recently decided to partially or completely limit this possibility.
Define a good pricing strategy
Making your rental investment profitable goes through the definition of a competitive rental rate. Remember to adapt your rent to those applied in the region. Depending on the quality of your property and your services (if you offer any), you can increase your price a little more. The trick is also to vary your prices depending on the seasons, the installations and the arrangements you make. It is logical that a rental is more expensive if it includes additional services or comfort equipment such as a jacuzzi, fiber, etc.
Entrust the seasonal rental investment to an agency to be more efficient!
If you have decided to embark on this adventure, do not go alone! Indeed, some individuals who have decided to invest their money in real estate do not always manage to do good business. To be sure of making a profitable investment over time with a turnkey rental investment, we recommend that you contact an agency. By partnering with real professionals, you will benefit from all their expertise to make your investment a success. As an individual, it is now very complicated to find the rare pearl: real estate agencies rush to add more and more ads, and established real estate investors leave very little room for new entrants. Here are the different services that you can delegate to an agency for your turnkey rental investment project:
the steps to search for real estate to buy according to your criteria of budget, region (or city), and type of accommodation
the management of all the administrative procedures, such as the creation of a detailed financial project, or the various appointments with the notary (with the help of a power of attorney to be carried out beforehand)
the organization of all work in the context of the construction or renovation of an apartment or a house
the decoration of the premises to make potential tenants want to come and visit the site
all the steps to find tenants likely to be interested in your property
the day-to-day management of all administrative paperwork, such as rental management contracts, which can be quite restrictive