Have you ever thought of elevation as investment strategy ?
Real estate prices are constantly rising and your borrowing capacity is reduced.
You can no longer acquire a new property Bordeaux or Biarritz, prices are around 5000 euros per m2!
Without moving you can raise your house or building in order to create living space.
What is the point of this operation? You create surface from a property you already own at a lower price than an acquisition.
In order to carry out this type of project, there are legal procedures to be carried out as well as technical constraints to respect. However, you have the option of make the operation profitable by controlling costs while optimizing the operation of your elevation.
1 – Raising: The steps to succeed
Schematically, raising a house amounts to remove the roof, raise the walls and put a roof on top.
The operation must take into account the rules of location in relation to neighboring buildings. Likewise, the near a historical monument may complicate the operation.
Your project materializes once you obtain all the authorizations and the technical aspect is validated.
Elevation projects are governed by a Local Urban Plan (PLU) in urban areas. Thus, the study of it determines if you have the possibility of carrying out one.
Then a prior declaration of work must be deposited for all elevations included between 5 and 40 m² of floor area. For surfaces greater than 40 m² floor area, you must request a building permit. If the expansion project is greater than 150 m² of floor space, you will be required to have hiring an architect to apply for a building permit.
The particularity of the elevation is that it modify the roof. Consequently, the surface taken into account, for the legal procedures, is that of your home plus that of the new one created by the elevation.
Your elevation requires themandatory intervention of an architect if the total surface of your house with elevation exceeds 150 m².
Will the foundations of your house support the extra weight linked to the elevation of the house? Will load-bearing walls be able to support the load of the upper floor ? What materials to implement to carry out the raising of house in complete safety?
You must ask yourself all these questions before you start, a architect responds with a feasibility study.
In concrete terms, how does an elevation project take place?
It starts with the roof removal by removing the tiles or slates and all the framework.
After removal, we enhance the walls either by laying a wooden frame (if the loads tolerated by the foundations and load-bearing walls are low) or by laying bricks or concrete.
The next step is the installation of wall insulation as well as the installation of dry and wet networks (electricity, heating, sanitary facilities, etc.).
Finally, we raises the roof while ensuring good insulation. You can increase the energy performance of your home. As a bonus, it is possible toobtain subsidies and tax benefits with this energy improvement.
Surround yourself with trusted professionals is essential to transform the technical constraints of the project into opportunities.
2 – Elevation: Make your project profitable
The profitability of your project depends on 4 criteria:
- The cost of raising
- Market prices
- The choice of professionals to carry it out
- Its operation
What is the cost of an overlay?
The prices of an extension vary according to the difficulty of access at the construction site and type of structure to create (wood, metal, breeze block, etc.).
They also depends on the type of coating outside, the type of cover and the insulation selected.
Finally the interior trim level also plays into the amount of the invoice.
We advise you to always focus on quality of your projects in order to better sell and better rent.
On average, a raising of standing costs 2000 euros from m² but may vary by location.
You wish to carry out an elevation of 50 m²your work budget is €100,000. It’s always cheaper than a T3 of 50 m² in Bordeaux.
The cost of the project may increase if you plan a staircase to make the access completely independent.
In which sector does it make sense to build an elevation?
We will take 3 quantified examples to illustrate the interest of the operation according to the geographical sector.
You have the possibility of carrying out a project of elevation of 50m² in the 17th arrondissement of Paris.
Prices are on average 11,000 euros on m² and your construction cost of 2000 euros as quoted above.
The works budget is thus 100,000 euros and the value of the elevation taking into account market prices is €550,000.
Thus, this strategy allows you to achieve aunrealized capital gain of 450,000 euros.
We use the same methodology and the same costs with the same surface.
Prices reach 5000 euros per m² in Bordeaux Chartrons.
The magnification value is €250,000 (50 m² additional living space). The elevation always costs 100,000 euros, i.e. a unrealized capital gain of 150,000 euros.
Last example, the magnificent city of Perigueux with average prices of 1500 euros per m².
By carrying out an elevation project with a cost of realization higher than the market price, you lose money.
you spend 100,000 euros for 50m² of living space worth €75,000. Your loss is 25,000 euros without taking into account the evolution of the market or the rental aspect.
This strategy is interesting provided it is carried out in a city where construction prices are twice lower than market prices!
How to select the right professionals to make your project a reality?
The choice of professionals is just as important as the choice of the city to carry it out.
By selecting the good architecthe can realize thefeasibility study while accompanying you for the legal procedures. Calling on an architect is also a guarantee of quality because he puts his image into play and offers you tailor-made solutions.
Architects have teams that they manage to get the work done on time. Some specialize in elevation projects in order to offer you the best solutions.
Talk to an architect.
Surround yourself with a lawyer who has a perfect command of town planning law is a significant advantage. Surprises are sometimes less painful if you have a legal advisor to secure their interests and investments.
Be accompanied by a lawyer.
Here is our technique for finding the best in their fields:
- Analyze the projects or files processed on their websites
- Check google reviews
- Share the same vision of the project as the professional
Our investment club selects the best experts in their sectors!
How to optimize the profitability of your elevation?
The unrealized capital gainthat’s good but you don’t have no time to wait.
This is why we are considering raising as a rental investment project. Why only win one side when you can win on all sides !
It allows you to create a Independent T3 with access by stairs. We are still on the example of 50m2 with the same construction price (100,000 euros).
This budget seems high but in reality it can be partly financed by a grouping or repurchase of credit. It represents a monthly payment of 500 euro credit.
To How many rents a T3 of 50m² furniture in your city ? What is the price of the night in your city ?
On Bordeaux a furnished T3 does not rent less than 800 euro and the night is on average 150 euros.
By using your elevation as a long-term furnished rental, you finance for free your project and you generate a positive cash flow of 300 euros.
By renting part of your Principal residence (your elevation in short-term rental) 120 days a yearit is 18,000 euros of rental income that you perceive. We remove your monthly payments, operating expenses and taxes.
You have 5000 euros net left in your pocket!
Succeeding in an elevation project is above all tosurround yourself with the best professionals to achieve it.
You must not not get started if the costs are higher than market prices !
There are always solutions to finance your work so do not skimp on the quality of the services.
In the end, you have the opportunity to finance the entire elevation by transforming it into rental investment.
Real estate investment attracts more and more French people for many reasons. Becoming a lessor owner represents the opportunity to reduce your taxes, to benefit from an additional income, or even to ensure a peaceful retirement.
Real estate is a very interesting long-term investment thanks to the possibility of making capital gains. Whether for long-term or seasonal rental, a rental investment project must be carefully considered.
First of all, we must define the right tax exemption system and the appropriate status for our objectives. Today, we are going to discuss the special status of the non-professional furnished rental company.
When renting furnished accommodation, there are two possible statuses:
- Non-professional furnished rental lessor (LMNP): the activity of lessor must not be the principal activity of the investor.
- Professional furnished rental company (LMP): the lessor’s activity constitutes the principal activity of the lessor.
LMNP status remains the most common of the latter two. Discover with us what this status consists of, its advantages, the taxation of the rental investment, and how to make its declaration.
The first steps in LMNP
The LMNP status is suitable for people wishing to build up a heritage and generate rental income for a serene retirement.
Investing in real estate in LMNP means making a rental investment. That is to say, you undertake to acquire the property with the aim of rent it out.
The rental must begin the month following the date of acquisition of the accommodation or completion of the building.
As the name suggests, you must rent furnished to take advantage of LMNP status. That is to say that the accommodation must be sufficiently equipped so that the tenant can live there without having to add furniture.
By clicking here, discover the list of furniture required to rent under a furnished rental contract. ( https://www.service-public.fr/particuliers/vosdroits/F34769 )
You can only claim the status of non-professional lessor if your rental income is taxed in the category of industrial and commercial benefits.
The profitability of a furnished property attracts many investors. Indeed, a furnished rental brings in on average 15% to 20% more than an empty rental.
Also, the tax regime of a furnished rental gives real added value to this type of rental investment.
Opting for the LMNP regime allows you to enjoy significant advantages. The first of them is the tax system.
If you rent a furnished property as the tenant’s main residence, you receive Industrial and Commercial Benefits (BIC). There are two tax regimes:
- the micro BIC diet.
- the real diet.
The micro BIC diet
The micro BIC scheme applies when your rental income does not exceed €70,000 per year. It will bring you a reduction of up to 50% on the latter. Thus, you will only be taxed on half of your rents.
The actual diet
It applies when your profits amount to more than 70,000€ per year. This regime has the advantage of depreciating the accommodation and therefore reducing your tax base.
If the amount of your expenses is higher than the standard allowance of the micro BIC scheme, you can choose the actual scheme of your own free will.
This is more advantageous, but entails formalities close to those of companies. Thus, you will be assigned a SIRET number and you will have to use a chartered accountant or an approved management center.
Opting for the actual regime allows the following charges to be deducted:
- Manager compensation.
- The purchase of small equipment (up to €500).
- Insurance premiums.
- Taxes and duties payable by the owner.
- Repair work.
- Maintenance expenses.
- Acquisition costs.
- Financing costs.
- Social security contributions.
The special cases of bed and breakfasts and rural cottages
If you rent your rentals in guest rooms or furnished cottages, the micro-BIC regime applies when your income does not exceed €170,000 per year. Also, the standard abatement that applies here is 71%.
Make your declaration in LMNP
The case where there is no tax
In some cases, there may be no tax on your rental income. To do this, you must meet one of these two criteria:
- You rent or sublet one or more rooms of your own principal residence on lease furniture. The amount of the rental must of course remain reasonable. This type of rental is ideal if you are targeting a student profile.
- You rent or sublet one or more rooms in your own main residence as guestroom. You are not taxable as long as your income does not exceed the amount of €760 each year.
In case of deficit
If you are in a deficit situation and you have the status of LMNP, then the deficit will only be charged to the non-professional profits of your tax household made during the year. (To complement your reading, we recommend our article on the taxation of rental investment.
How to declare your income?
In micro-BIC mode
You are required to report the all profits collected for your rentals. Complete rows 5ND, 50D, or 5PD. The fixed allowance is automatic.
Bed and breakfast or cottages
Here you must also declare the total amount received. Complete lines 5NG, 5OG or 5PG. The fixed allowance is automatic.