Before embarking on a rental property investment, you must first decide on the location of the future accommodation… And it is not often easy to know how to choose the city where to invest! During a first rental purchase, identifying real estate with high yield potential is a crucial step. The acquisition of real estate can provide a significant source of income, if it is well chosen. Whether in Paris or in provincial towns in France, location is the number one criterion in terms of rental strategy. In particular, it influences the financial performance of the operation. Between the price of the rent or the establishment of a tax exemption system, the results may vary from one city to another. The effects are numerous on the profitability of the operation.
Real estate purchase: analyze the demographic evolution of the sector of your future home
The value of a rental investment is judged, first of all, by the demographic evolution of a sector. Is the birth rate steadily increasing in the region? This criterion suggests a dynamic local life with significant service and housing needs.
On the other hand, if the age pyramid increases over the years and young people leave the territory, you will encounter difficulties in renting your real estate investment in the long term. Indeed, according to a study by Insee*, from the age of 60, more than 70% of households own their home. In this case, the rental real estate market displays a surplus of properties, leading to a drop in the level of rents. The rental profitability of your assets will be affected.
Demographic differences can be significant within the same department. In principle, economic or tourist areas see their population increase, while more rural areas may see a decline in population.
To identify cities in which to invest and increase your rental yield, look for urban areas that favor the settlement of new families and the influx of students.
The INSEE demographic statistical tool provides you with all the essential demographic and economic indicators of a territory. Using it will help you make your choice.
Investigate the economic attractiveness of the city for your investment
To choose a city in which to invest , parameters such as the dynamism of employment and the sectors of activity of local companies define the attractiveness of a territory.
The presence of economic centers is a sign of real accommodation needs. Furnished rentals for temporary workers, apartments or residential houses for families, all types of rental properties can be offered. In addition, the presence of jobs in the sector provides greater stability of household income.
In addition, a tourist region with a historic center or on the edge of the coast encourages short-term rentals for visitors. The rental yield of the investment then differs according to the type of real estate operation, the latter adapting to local demand.
On the other hand, a territory with a high unemployment rate should encourage you to deepen your real estate research. Are economic revitalization projects underway? The potential return on your investment can be reinforced with new business installation projects or, on the contrary, remain completely uninteresting.