A rental investment project doesn't end with the acquisition of a property. You then have to rent it out and manage the rental process. Find out more about the steps involved.

1. Providing decent housing

You must offer for rent a decent dwelling, i.e. one that is not hazardous to the health of the occupants, is free from infestation by pests or parasites, and meetsminimum energy performance criteria. To achieve this, the property you've acquired may need to be renovated before it can be rented out. You should have budgeted for this when you applied for a bank loan to finance your purchase. Now you need to ask your bank to release the loan so you can pay the company in charge of the work.

2. Insuring your property

At the same time, you need to take out Non-Occupant Owner (PNO) insurance. This complements the tenant's or co-owner's insurance in the event of a claim, covers the property when it's vacant, and insures the furnishings in the case of a furnished rental. Your property will also be covered by thetenant's home insurance, which includes a number of guarantees: tenant's civil liability, fire insurance, water damage insurance, natural disasters, theft, burglary and vandalism, glass breakage.

You can also insure against unpaid rent (Garantie des loyers impayés (GLI)). However, it is forbidden to combine GLI with a guarantor requirement unless the tenant is a student or apprentice. Insurance against unpaid rent costs between 2 and 5% of annual rental income, but insurers impose fairly strict conditions on tenants' income and financial guarantees.

3. Rent out your property

Provide mandatory diagnostics

A certain number of diagnostics must be carried out before the property is rented out, as you must provide them to the tenant in a file appended to the rental contract.

  • The Energy Performance Diagnostic (DPE), which must also appear in the rental ad.
  • Lead exposure risk report (Crep).
  • State of the internal electricity installation if more than 15 years old.
  • State of the internal gas installation if more than 15 years old.
  • Diagnosis concerning the presence or absence of asbestos, which does not have to be appended to the rental contract, but is available to the tenant on request.
  • Statement of risks and pollution (natural, mining, technological, seismic, etc.) indicating whether the property is located in a risk zone.

Choose the type of rental

You need to decide what type of rental you want to offer: furnished or unfurnished, residential or seasonal. Among other things, this will depend on the location of your property. If it's in a student town, it's best to opt for a furnished student property; if it's in a tourist area, for a seasonal rental; if it's in a medium-sized town, for an unfurnished property. You also need to take into account tax considerations. Schemes that allow you to benefit from tax advantages apply under certain conditions, which may relate to the type of rental.

Determining the rental price

Next, you need to establish the rental price for your property. The rent for a principal residence can be set freely, taking the market into account, unless the property is located in a rent-controlled zone. In this case, you must align your rent with the prices charged for the same type of property in the same zone. Certain criteria are also taken into account, such as the general condition of the property, its energy rating, whether it's furnished or unfurnished, the floor and presence of an elevator, proximity to shops and transport links, etc.

However, certain constraints have been put in place in tense areas. You have the right to set the rent you want when you first rent, but if there is a change of tenant, the rent cannot be increased unless improvement work has been carried out or the existing rent has been undervalued.

You also need to anticipate the amount of rental charges that your future tenant will pay each month in addition to the rent. These are generally part of the condominium fees for services that directly benefit the tenant, such as cleaning of common areas, upkeep of green spaces, janitor service, minor repairs to common areas, garbage collection tax, and so on.

Renting out

When it comes to renting out your property, you can either do it yourself or ask an agency to do it for you. This involves taking photos of your property, writing the advert, posting it on specialized websites, organizing viewings, choosing the tenant, preparing the rental contract, carrying out an inventory of fixtures, and signing all the documents. This stage can be quite time-consuming, which is why it's often advisable to use an agency.

4. Manage rental

You can also ask an agency to take care of rental management, or do it yourself. But as with renting, rental management can be quite time-consuming, as it involves collecting rents and charges, sending rent receipts to tenants, filing tax returns on rental income, managing tenant relations, etc.

Post-purchase management is a time-consuming and costly part of the rental property business. However, the process can be made easier if you enlist the help of a professional like Raizers Transactions to support you throughout your rental investment project.

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