Investing in SCPI in 2022: Understand everything before you invest

There are several options available to you to invest in SCPI (Société Civile de Placement Immobilier). You will be able to access real estate simply, without any of the management problems associated with owning your own property. Each type of SCPI investment has its advantages and disadvantages.

Understanding SCPI

This form of “enterprise” is a fund that collects public savings and invests them in rental properties. Savers become “partners” and receive the collected rent less commission almost every quarter. An appraisal or appraisal of the value of the property is conducted each year. So, if the value of the property has increased, the share price increases. On the contrary, if it fell, the share price decreases.

Several families

In general, there are several types of SCPI. They are not all about the same investment. The most common are called yield (such as SCPI Corum), which usually invest in shops or offices. These societies prefer a regular redistribution of income. There are also those called fiscal: there are the most of them. The latter take a position on the segments that give rise to tax benefits, as can be found on Portail-SCPI.

To invest, you need to approach the management company through a bank or ideally through an independent advisor. You can also get more options by contacting wealth management consultants or specialized websites.

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>> Portail-SCPI is a site dedicated to investing in SCPI that will guide you in your approach. A wealth management consultant will help you for free.

There are four ways to finance an SCPI investment: a loan (mortgage), cash investment (savings), life insurance or dismemberment. Each of the financing methods has its advantages and disadvantages. Then it is necessary to compare his financial situation and compare it with his savings and investment projects to choose the most suitable option. Each investment is a thoughtful action that takes into account the study of several elements: debt capacity, long-term vision, need for income, etc.


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How SCPIs work

To understand how it works and to consider this method of saving, you must evaluate all aspects of it.

Procurement

Purchases of property (and therefore SCPI securities) are made directly in the primary market through shares issued by companies. It is also possible to sell on the secondary market. The buyer then acquires the shares resold by the owners. Those known as “share capital” are not permanently available and are only open to the primary market during capital increases. Those with “floating capital” are always open: it is the managers who manage to close the subscription when they believe that market conditions are unfavorable.

Resale

Resale is carried out directly to management companies. For SCPI with variable capital, the manager chooses to buy back units at the withdrawal price. The latter corresponds to the current subscription price minus the cost. Finally, he cancels them.

In the case of equity, the shares are then offered for resale in the secondary market held by the manager. In this market, the selling prices are directly opposed to the offered buying prices. Costs for the purchase of units are deducted from the sale price: thus, they are 10% lower than the purchase price. Buyers will have to hold onto their shares for two years if they want to win, despite the 5% annual return. They are stored for an average of twenty-two years.

Income

As a general rule, the income from SCPI is transferred to the savers’ bank account on a quarterly basis. They are then expressed as a percentage less costs and expressed in terms of the purchase price of the units (including all costs). Then the investor receives his first income for the (entire) quarter after the subscription. Income derived from SCPI investments is taxed as “property income”.

Costs

Fees are often high and rarely clearly stated. As a rule, they are from 10 to 14% at the entrance (including a registration fee of about 5%). These amounts may vary depending on the nature of the SCPI: fixed or variable, and depending on the market in which it was purchased (primary or secondary).

The commission is used to reward the management company, who will retain 10% of the rent as a “management fee”. For professionals, these costs can be compared to the direct acquisition of real estate, as well as the cost of managing it when it is entrusted to a manager. On the other hand, the costs of transfer or removal may be foreseen and are borne by the buyer. These costs remain more measured.