Factors To Increase ROI In A Real Estate Investment

Choose a good neighbourhood that is pleasant to live in and has a good reputation: you will reduce the risk of rental vacancies. There is no shortage of information on this subject, especially on online discussion forums. But again, nothing beats the field experience of visiting the neighbourhood at different times of the day.

Before this strategy pays off, we should be aware that it involves high risks. These cities can sport a high concentration of people under much financial strain who have difficulty paying their rents. In addition, you are not immune to external events that could complicate the rental market (for example, if the main employer relocates and the State reduces the amount of the CAF, the risk of no payment may become even more likely).

Validation

Validate the tenants’ appetite for the neighbourhood. After all, different areas cater to different groups of people. It is possible that certain areas may not be suitable for the rental of the type of property you wish to acquire. For example, a neighbourhood could attract families (therefore perfect for T3 and T4) but repel students and young workers (T1 difficult to rent). 

To learn more about this, one trick is to make a fake rental offer on an ad site. The answers you will receive will give you an estimate of the rental demand and the tenant profile. However, this instrumental technique is not the most ethical, so we recommend that you apply it sparingly for your real estate investments.

Choosing the right accommodation

Beyond the displayed price, there are multiple criteria to take into account. We recommend that you pay particular attention to these:

• The location of the property in the district: proximity to shops and public transport. Avoid noisy areas at all costs (busy street, stretches of bars, wet markets that become crowded easily)
• The accommodation should have plenty of sunlight, especially in the living room or the main room. This is an essential criterion for many tenants.

Are the rooms well arranged? If not, is it possible to rearrange them?

In the case of an apartment, check the amount of the condominium fees. It can turn out to be significant.

Ask yourself: is the apartment suitable for the tenant profile I am targeting (T1 for students, T2 for couples or young workers, T3 and beyond for families, etc)?

Our advice: don’t focus on added value 

If you plan to resell the property in the long term, naturally, you hope to realise a capital gain. However, we recommend that you do not make it a major criterion in choosing your accommodation. Firstly, it is better to focus on immediate profitability (be sure to rent at a suitable price) than to speculate about the future (since you are not immune to a fall in the real estate market). 

Also, if sellers anticipate a future rise in the real estate market in their city, they will integrate this potential for revaluation in their prices anyway. Your profitability will be lower because you will have paid more for the accommodation.

To conclude, in the context of a rental investment, the capital gain should be seen as a bonus rather than an objective to be achieved.