Rental Housing or SCPI, Which Investment Should You Prefer in 2022?

There are several ways to invest in rentals: directly or through SCPI. What is the best solution for your profile?

Rental investments are very popular among French people who want to secure their assets. A reliable shelter, the stone is perceived as an opportunity for additional income, even a pension.

Direct investment in real estate

Despite the enthusiasm it generates, direct investment in real estate is not without limitations. For example, this can lead to: significant debt for the investor, the risk of non-payment, the need to bear various fees and taxes… ultimately, a financial situation that can quickly become delicate when costs are higher than profits.

It’s a fact that managing a rental can quickly become time-consuming, but it’s important to be able to free up time to take care of it. In addition, this type of investment also requires keeping abreast of legislative acts (development of taxation, changes in real estate legislation, etc.), which is not always to the liking of the average investor… Who will most often switch to residential investments and de facto close the door to other high-profit classes assets such as businesses, offices, warehouses, clinics, etc.

SCPI, how does it work, what are the interests?

SCPI (Société Civile de Placement Immobilier) is an investment vehicle that is assembled and managed by a management company. It collects funds from investors for the purchase of commercial premises, in which investors own part of the assets (parts in proportion to the invested amount). They leave the property management to SCPI, which in return pays them a regular income. In addition, SCPIs real estate portfolio consists of diversified assets both typologically and geographically.

Paper stone has strong arguments, such as:

  • the investor does not need to worry about inheritance management issues, as it is supported by DCPI;
  • the rental risk is distributed among different tenants, therefore it is minimized;
  • management company communicates all elements related to SCPI life;
  • every quarter, the investor receives a rental fee with a detailed assessment of the management of his real estate portfolio.

However, it is important to keep in mind that investing is not without risk and performance is not always guaranteed. Thus, the shares held by the investor may lose value. In addition, the resale of shares is associated with market fluctuations, which can be “bullish” or “bearish”. Therefore, it is important to prefer highly capitalized SCPIs that benefit from an efficient supply and demand ratio to make the sale of shares profitable, for example in the event of a life accident.

SCPI vs renting an apartment, what to choose?

Unlimited performance

Excellent performance! SCPI recorded an average spread of 4.45% in 2021 despite the financial impact of the pandemic. They have remained resilient and competitive in the face of straight real estate… Serenity on top of that.

Better diversification

By investing in SCPI, you are not investing in one property, but in dozens at the same time. Thus, the risk of choosing an unsuccessful place is significantly reduced, as, for example, when renting a vacancy.

Greater availability

SCPIs are much more affordable than direct real estate. Today it is possible to invest in shares for less than 200 euros.

(Often) more favorable taxation

Depending on your marginal tax rate, it may be interesting to invest in European SCPIs and thus benefit from more attractive taxation in the country.

Finally, owning SCPI shares allows investors to increase their savings while reducing risk due to the size of SCPI’s assets.

Prioritizing investments in “real stone” means putting all your eggs in one basket. Conversely, investing in SCPIs means choosing to co-own hundreds of buildings. Whether it is office real estate, retail, residential or healthcare, the sector is doing very well.