Invest 100,000 euros? Discover (very attractive) real estate investment opportunities
In the current economic climate, it is especially difficult to know how to invest your savings. Indeed, the financial benchmarks that we could have had for several years have been destroyed in recent months: a sharp rise in long-term interest rates and spreads between countries, the return of galloping inflation that we have not known for forty years, new geopolitical risks generating strong uncertainty about the future evolution of stock markets… so many new parameters that today require deep analysis before allocating your savings.
The right questions to ask yourself before investing €100,000
What risk are you willing to take?
Before talking about profitability, it is worth considering the risk. In any financial investment, the balance between the expected profit and the risk of loss that a person is willing to accept is the basis of decision-making by the saver. Each investor has his own risk profile, which in practice depends on his financial and family situation, his personal character and his investment horizon. In the preamble of any decision, it is worth asking the question: “how much am I willing to lose from this amount invested at the beginning? For example, if we take as a practical case an investment of 100,000 euros, the fact of calculating the maximum loss that we can receive in euros, and not as a percentage of the initial amount, allows us to have a much clearer idea of: am I ready to lose €10,000, €20,000, €50,000? The answer to this question, of course, is related to the importance of this amount in the total wealth of the depositor. In any case, it takes precedence over what follows: “What is the purpose of my return? »
Do you have a short, medium or long term vision?
Time perspective is an important aspect of investing. This temporality, of course, determines the risk as well as the liquidity of the investment. Locking up a sum of money over a long investment period gives access to less liquid asset types, which usually provide additional returns (illiquidity premium). Conversely, if the investment horizon is small, only highly liquid vehicles will be acceptable. Depending on his personal plans, his age and his health, the depositor will inevitably have to consider the investment period he envisages for his savings. In the case of large amounts, such as in our previous example (€100,000), the issue is even more critical because it will be difficult to mobilize this type of amount with a bridging loan in the event of an untimely need for liquidity.
Is your goal profit or tax exemption?
What interests the investor, once the level of risk accepted and the investment horizon have been resolved, is, of course, the expected net return on the investment. However, this is the result of a combination of two complementary components: the gross financial return and the level of taxation of the investment. In some cases, so-called “tax-free” products have a negative tax component that improves gross financial results. Then it can become an important reason for an investment decision. Therefore, in most cases, the saver must prioritize one of the two components that make up the performance of the investment net of taxation (financial indicators or the level of taxation) in advance, since the types of products offered are radically different, and it is rare to be able to simultaneously optimize these two parameters.
How to grow €100,000?
How to evaluate 100,000 euros in the medium and long term?
Having a large amount – for example €100,000 – allows the investor to significantly expand the range of available investments and/or create a much more diversified portfolio. In the second case, the result is a lower level of risk for the same expected return, as Markowitz’s portfolio theory teaches us. As opposed to a more diversified portfolio approach, one can also pursue the goal of accessing investments with a higher entry ticket – generally €100,000 – such as funds reserved for qualified investors (FCPR, professional OPCI, etc.). The more flexible the investment horizon (and therefore potentially long-term), the greater the range of available investments. Another possibility with a ticket from 100,000 euros will be the direct search for real estate, which will be an “individual” investment adapted to each investor, either to obtain rental income or to keep it in use.
How to get additional income from 100,000 euros?
There is nothing better than investing in real estate to generate relatively stable additional income over time. Either within a tax-advantaged framework like life insurance (UC real estate), or through unlisted real estate funds (SCPI, OPCI), or even by looking at listed real estate companies. Direct investments in investment properties can also be considered from €100,000.
Where to invest 10,000 euros?
Invest in SCPI to free yourself from management worries
SCPI investments are available from a few hundred euros. A down payment of €10,000 is therefore ideal for investing in these unlisted properties. Investors have a wide choice: around thirty management companies offer more than a hundred profitable SCPIs, mainly invested in commercial real estate. Annualized distributed returns net of fees range from 4% to over 6% with a quarterly separation rate. One of the main advantages of SCPIs, apart from their high yield, is that the saver is freed from any management constraints: no need to pay property tax, no need to vote on shared ownership, no need to choose a tenant, no need to pay bills. … These administrative tasks, specific to any property owner, are actually delegated to SCPI management companies, which provide these vehicles with significant legal and accounting resources, thus optimizing the financial return on this investment.
Choose real estate crowdfunding to get more than 9% profit
The concept of crowdfunding originates from the United States, literally means “crowd financing”, it means a complete break in the relationship between the creditor and the debtor (or investor and entrepreneur). Therefore, this is a small revolution, as bilateral relations between the borrower and his banker (or between the founder of the business and his group of “business angels”) give way to a form of pooling or collectivization of investments. The application of crowdfunding in real estate has been very successful in France for about ten years. Thus, several platforms were launched to finance renovation projects or the construction of residential or tertiary real estate, which gave rise to the concept of “crowdbuilding”. Be careful not to confuse this new generation of savings products with traditional rental investments, because it is primarily a matter of investing in a real estate program through financial securities: debt or equity securities. Thus, the investor is not the owner of real estate, as in the case of rental investments directly or through an SCI, but the owner of debt securities or shares of a company (SAS, SA, SARL, etc.). Platforms that offer crowdfunding – in fact comparable to financial investments – are necessarily regulated by the AMF and cannot carry out their activities without first obtaining the legal status of CIP (participatory investment consultant) with registration in ORIAS (organization for a unified register of intermediaries in insurance, banking and finance).
The profitability of real estate crowdfunding transactions is generally much higher than that of traditional rental investments: for example, the average return of 9.31% in 2020 and 9.23% in 2021. The default rate is historically low: since 2012, only one program has defaulted since the introduction of the tender procedure of the Terlat group in 2017. According to project aggregator HelloCrowdfunding, only 165 projects with delayed refunds out of a total of 1,358 projects received refunds.
Bet on life insurance to take advantage of attractive taxation
Life insurance retains a very attractive tax exemption compared to common law taxable investments, with income tax exemption after a holding period of 8 years (up to €4,600 for a single individual or €9,200 for a couple subject to joint taxation). . Within real estate units, a wide selection of funds is offered in the form of SCPI, OPCI or SCI. Programmed reinvestment of dividends distributed in support of the Eurofund is usually included, which allows to further increase the yield.
Regardless of the amount that the saver wishes to invest, be it a few thousand euros or more than 100,000 euros, there are solutions that allow him to optimize the risk/return ratio and adapt the liquidity of his investments to his investment horizon. In many configurations, real estate and, in particular, unquoted funds such as SCPI, OPCI or SCI, offer an interesting balance between financial returns, pooling of risks and taxation, adapted to each investor’s profile. In a general context of high uncertainty, these investment decisions make it possible to generate regular income with relative stability of valuations, even if it is necessary to remember that neither capital nor profitability can be guaranteed.
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