First-time buyers: How to invest in real estate?

The more you invest, young, in real estate, the better! However, the process is not necessarily simple…. Arnaud Groussac, founder of Patrimoine Store, a platform specializing in real estate investment, takes stock and gives you advice.

Mysweet'immo: Should we start early?

Arnaud Groussac: The advantage of investing when you are a first-time buyer (25-30 years old) is that you is young, that we have the time and that we can finance for a long time. Do not be afraid to start early and small. The important thing is to start. Even if it means making another investment 3 or 4 years later. Moreover, young people have understood this: today, 20% of our customers are first-time buyers who invest in rental accommodation and they start getting started earlier and earlier. Especially those who live in tense areas where they cannot afford to buy their main residence. We sometimes deal with people aged 22, 23 or 24! Which was not the case 10 years ago. And besides, at that time, banks refused investment files when the borrower did not own his main residence. Mentalities have changed!

Warned, first-time investors have fully understood that real estate is a safe haven. What are they looking for? Build up assets, grow their savings and prepare for the future! Even if their knowledge remains a little vague and their project messy, they know very well that, when they sell the property on which they have invested, they will have a greater contribution to afford a beautiful main residence.

It should be noted that the Covid-19 has accelerated this desire to prepare for the future... Many tenants in large cities are investing in order to be able to change their life, for example, to move to the provinces and buy a house there... in 10 years .

Mysweet’immo: The contribution, a sine qua non for being able to borrow?

Arnaud Groussac: Investing when you are a first-time buyer is not easy. What is the problem? Obtaining bank financing. Moreover, more than half of young people who want to invest fail. They do not have the capacity to be financed. In question: the tightening of banking standards. Banks are currently extremely vigilant about indebtedness. The applications that are often rejected concern young people who do not have rent. The banks anticipate the housing costs and, there, the debt exceeds the 35% authorized. Executives in the Paris region are also files that are not easy to finance. Despite solid incomes, the large amount of their rent (which goes into debt) is a major handicap for them.

The contribution is essential especially in a fragile file. This is the way to show the bank that we are invested in the project. The contribution reassures the bank. It's a way of telling him: you don't bear the risk of the project alone. In general, first-time investors have savings and they place it in their real estate project to boost it.

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Without contribution, it is essential to have a stable profession and charges, including rent, which do not exceed 35% of debt.

Mysweet'immo: What are the mistakes to avoid?

Arnaud Groussac: You shouldn't start with the first product in mind, the 1^era idea… And yes, because risks and costs should not be minimized. For example, we do not buy because it is not expensive: there may be work, rental vacancy ... A rental investment project is worked on, studied. In short, we don't get carried away! To avoid the mistakes of youth, linked to inexperience and passion, it is better to be accompanied.

While you have to be very careful about the price, the location, of course, you don't have to be emotional either. We do not plan for the good. The other mistake to avoid is to dream of a very profitable operation that allows you to be an annuitant in 10 years. Many young investors, even if they consume a lot of content on the Internet, are kidding themselves. At Patrimoine Store, a wealth management consulting platform specializing in real estate, we have to bring them down to earth!

Mysweet’immo: What are the most interesting properties for this type of buyer?

Arnaud Groussac: 60% of our first-time investors are looking for furnished accommodation. As they are younger and younger to want to invest and they have little income (around €2,000), investing in managed residences is the best option for them. Today, with the exits of Loi Censi-Bouvard, they can acquire a nice student studio in a residence that is 10 years old, almost new, on which they have a return of profitability to the operator, in the heart of the city, especially in La Rochelle or Lyon, at a very good price (70 to 75,000 euros). This type of product is risk free. It resells very well.

Mysweet’immo: What advice would you give to first-time investors?

Arnaud Groussac: You have to approach your investment with flexibility. And favor flexible solutions. Between the ages of 25 and 35, we move... It is better to invest in a small managed residence because it sells very well rather than getting stuck in a Pinel law that we will have trouble getting financed! Anyway, on this target, we are not proposing a Pinel Law. This is rather reserved for couples over thirty who wish to invest in the longer term and reduce tax.

There is also no need to turn to a broker. Often, the files pass much more easily with the bank of the first-time buyer (in 70 to 80% of cases). She knows her client.