When looking to invest, you are looking for cash flow. In other words, we are trying to have rents that exceed all our expenses . At a minimum, self-financing will be sought, i.e. income equivalent to expenses.
Also to be discovered : La surface minimum de location
The goal is multiple, to secure you in case of rental holidays and not have to take money from our pocket in this case, to be able to borrow again with rents that are 30% higher than our monthly repayment and sometimes even live from it.
And if this goal is easily achievable in many cities in France and I see it in my training groups, there are cities where it is better not to invest.
Because real estate is first and foremost a matter of market local and if it is possible to be profitable everywhere today, what would be tomorrow?
Plan of the article
- What citiesshould be avoided?
- What if real estate loses 30% in 10 years as in Saint Étienne?
- The case of Le Havre
- Lease tension
- Never forget this method
- Economic attractiveness
- Cities with strong dynamism
- CONCLUSION: In real estate, which cities should be avoided?
Plan de l'article
What citiesshould be avoided?
Let’s analyze some iconic cities such as Saint-Étienne, Paris and Marseille and examine 3 interesting criteria to analyze more potential value in the long term.
It is what we go to this video
Rental investment should be simple.
After all, it’s about finding an apartment, not too badly placed and at the right price and renting it. The reality is quite different.
Obviously, a good deal leaves quickly and often does not reach the stage of advertising on the Internet.
In addition to being rare, competition caused by Internet training preparing thousands of investors is pressuring, and I am telling you about it, and less determined or resourceful people end up giving up in the face of these difficulties.
Yet, according to several sources, thenumber of investors is declining.
Yet, far from discouraging, the market still offers opportunities and having personally acquired 40 apartments in 4 years, I know what I’m talking about.
If you want to join my group of investors and learn all the techniques to profitably invest in real estate, click on this link .
After all, real estate remains a sector in France where 110% can be financed , making investment possible for people with no starting capital and with low incomes. It is perhaps the simplest and most accessible way in the world to create a heritage .
But through the attractiveness of gain, opportunism or despair, many more or less serious and sustainable approaches emerged, such as wild real estate division, sub-leasing or construction/resale. Far from a simple rental investment here, we are talking about becoming an entrepreneur real estate or merchant of goods.
After all why not , but if finally the real question was not the fashion or technique you use, but rather there you invest
Perhaps we will address the most important issue, because in the short term you can be profitable, but what happens in the medium and long term knowing that most real estate investments will be held for at least 10 or 20 years.years.
Which could be more tempting, which could be more dangerous to have a huge cash flow in the short term, but risk long-term loss .
What if real estate loses 30% in 10 years as in Saint Étienne?
Difficulty finding profitability has prompted many investors to use increasingly complex techniques or to travel to cities that have been identified as problematic, and that is what we will be talking about in particular.
In real estate, we can distinguish two main approaches: the first is to invest to have added value when resale is typically what will happen when you invest in a big city .
The second is to have performance is the method I was talking about at the beginning of this video, which actually focuses on immediate cashflow.
These two major approaches stand out for a very good reason in most major cities, it is difficult to obtain a return and, therefore, to get a return you either have to get a very good deal, use more or less aggressive techniques or invest elsewhere .
You have seen examples of people who invested in Paris 10, 15 or 20 years ago and who have not made any cash flow for a very long time and who were only profitable when they resold and collected capital gains. They also benefited from lower rates. Unfortunately, with historically low rates, we can no longer count on this factor.
An emblematic city of all these questions is the city ofSaint-Étienne that I wanted to make this video, because in my training groups I have many members asking me questions about this city, because it is attractive for many reasons.
The first is among all those who live near Lyon find that the market is too expensive and therefore Saint-Étienne appears as one of the major cities in the immediate vicinity offering good yields.
The second reason is that Saint-Étienne offers low purchase prices per square meter while offering correct rental prices.
Finally last reason why the city contains a large population, it is not a village and many students that brings a significant tenant potential andrebuilt every year.
In fact, it was possible in this city to buy an apartment, work and be extremely profitable with a cash flow of 300 to €500 per month without difficulty and the problem that arises when you are investors is that you invest not for 1, 2 or 3 years but rather for 5, 10 or 15 years.
Otherwise, we are talking about problematic cities that are on the one hand in Paris and on the other Saint-Étienne here are some pretty scary figures when we look at them next to the other.
one hand, in Paris, you have the price per square meter which has increased by 54% in 10 years and on the other in Saint-Étienne it has fallen by 31% in 10 years On the .
In other words, if you had invested €100,000 in Paris earned €154,000 today if you had invested €100,000 in Saint-Étienne 10 years ago, you would have 70000€ today.
- 54% in 10 years
- Average price: 9000€
- Average rent per m²: 27,8€
See the historical price of Saint-Etienne
- -31% in 10 years
- Average price: 900€
- Average rent per m²: 7,3€
So, obviously, we are looking for profitability, but not at all costs , not at the cost of losing money when reselling.
Because in the end, in this example, Wouldn’t it have been better to invest €100,000 in Paris, even if it was not a cashflow for 10 years?
Retrospective proof is obviously always easy and that’s what it gives with the numbers.
In Paris: 100.000€ permit to buy 17 m² rented 20 €/month or a total income of 340€ per month or 40 k€ over 10 years.
Resale €150, 000:50 k from HP: Total 90
k In Saint Etienne 100 000€ permit to buy 110 m²rented 700€ /month for a total income of 84k€.
Resale 70 k: 30 k MV = 84 — 30 = Total 54 k
Here, in my approximate example, buying in Paris would have made it possible to earn almost 2 times more in the last 10 years.
Let’s take another iconic city that is Marseille
Marseille is one of these cities sleeping , because more than 10 years the price per square meter fell slightly 0.4% according to this site https://www.meilleursagents.com/prix-immobilier/marseille-13000/
If I do again my little analysis without taking any numbers, we realize that over 10 years, Marseille offers an intermediate result to the 2 previous examples , because we would have cashed the rents and made little or no HP at theresale.
Of course, taxation is a determining factor that I voluntarily set aside so as not to complicate things.
So the question is how to identify the cities in which it is best to avoid investing.
The first point to mention is demography. It is simply the number of people living in this city and the demography reflects in some of the dynamism of the city, its economic attractiveness and its destiny.
Observation is unattractive if we look at the demographics of Saint-Étienne, it has been decreasing since 1968, so that 50 years or a half century ago the population declines year after year.
Then the city will not disappear from the map and it seems to settle a stagnation around the number of current inhabitants is about 170,000, which means that unless there are important economic arguments, the city may never win people and see that it may have difficulty maintaining that number.
Of coursethis is just an indicator and the trick is to figure out how to interpret this signal. Where some people, that is, people invest in Saint-Étienne, see it as an opportunity, I see it personally as a warning .
The case of Le Havre
Another city that seems to be in trouble is the city of Le Havre , which has lost many inhabitants in recent years.
In other problematic cities, one could mention the case of Marseille , which has seen its population fall relentlessly since 1968, but which has begun a good recovery for more than 10 years probably thanks to the successful transformation of its city centre.
How demography can evolve in one direction or the other, and an investor who started in the 2000s in Marseille will have had a fine nose.
On the other hand, there is no surprise in terms of price developments per square meter, becauesit stagnated in 10 years, as I said earlier.
Lateral demography Paris east Another special case, because the city does not stand out on this point with a slight decline in the intramural population.
The other aspect to consider is what is called rental tension , that is, how difficult it is for a person to find housing and, most importantly, at what price he will be able to find.
There are three main methods to estimate your rental tension. The first is really to know your local market to do a field study to go see or call real estate agencies claiming to be a tenant and to see if we are treated like in Paris or if on the contrary we are greeted with open arms, if we are going to have to make a group visit with 50 people and have a file already ready or if we make individual visits where the real estate agent is more than a Keychain
There arecertain services whose data quality is not necessarily certain, but can also comfort you in one direction or the other and in the case of rental voltage for example for the city of Saint-Étienne the market seems very favourable to the tenant.
Of course, it is not necessary to takethese data for money and you need to look for the type of housing you want to rent and the state in which you want because it has a very important influence on the average statistics that you can observe.
Never forget this method
Finally, the last method to estimate rental tension is to exchange with investors who are in the city you are aiming for and this is really facilitated thanks to the Internet and all the private groups that exist in the case of Saint-Étienne the information I have is rather negative, because I know people who have new quality housing, but who has been empty for several months or more than a year.
After examining demographics and rental tension, the last criterion to consider is economic activity.
The reason is simple the more a city has reasons to attract companies the more it will have to house people who work in a company the people who pass into that company the suppliers of these companies and therefore it will generate an important economic activity and even indispensable to the city. This will bring financial resources to make the city pleasant so that it is a virtuous circle.
If I take the example of Paris, the number of intra-muros inhabitants is rather declining, well Of course, Paris having a special status in France, this is nothing worrying.
The analysis of economic dynamism will show that Paris is ranked 23rd no concern for the future of Paris.
Cities with strong dynamism
We will also find a large number of dynamic cities such as Bordeaux, Clamart, Nantes, Lyon, Rennes, Toulouse, Dijon, Aix-en-Provence and Montpellier.
Specifically, this means that these cities have all the assets to see their population grow in the future.
contrary, this analysis confirms the concerns we may have about cities such as Saint-Étienne that have been mentioned, but also Le Havre Mulhouse or Calais.
So for this analysis that has one that looked at the 113 largest cities of France we found Calais who last Le Havre who is in 104th or Saint-Étienne and 91stAt
CONCLUSION : In real estate, which cities should be avoided?
After reviewing these three criteria which are demographic rental tension and economic attractiveness , we realized that it is easy to secure your rental investment by targeting dynamic cities.
We aim to achieve short-term returns at all costs, but also and above all to protect our heritage over time by choosing territories and cities with high potential.
Thus, you will not only guarantee your investment project and its profitability. Ensuring that there is a significant and sustainable rental demand, but also your assets to medium term and therefore your potential added value.
If you want to join my group of investors and learn all the techniques to profitably invest in real estate, click on this link.
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