Top Investment Locations for Rental Properties: Identifying the Ideal Cities Based on Your Investor persona
Venturing into Real Estate Investment: Luring Opportunities Hidden in Places You Might Not Consider
© our website/Freepik By Christine Lejoux, Real Estate ManagerEdited on , updated at
- Copy link Link copied
Think investment, think real estate. With prices dropping by 10% to 15% and mortgage rates plummeting to around 3%, the stage is set. But before you jump into the nearest studio or two-bedroom apartment in your hometown, consider your investor persona—risk-averse, yield-hungry, or experienced. And remember, money isn't everything.
In a recent study, the Guy Hoquet agency network and Bien'ici real estate portal identified cities that suit each profile. Let's dive into the three categories: the family-oriented, the first-time investor, and the seasoned pro. We'll start with the heavily-populated metropolises, like Paris and Lyon, where rental markets are tight and costs are high, resulting in a limited rental yield. These cities are ideal for risk-averse investors seeking security over a big return. But remember, financial power comes into play here.
Real Estate's New Frontier: Buy Half-Price, Without Credit or Tenant
Low Yield vs. Guaranteed Tenant
In Paris, a studio costs more than 240,000 euros, offering a paltry rental yield of less than 4%. It's even worse in Lyon, with a staggering 150,000 euros needed for a studio with a rental yield of no more than 5%. However, rental vacancy risk is minimal in these cities due to their high demand.
On the other hand, cities like Saint-Etienne, Perpignan, and Limoges offer exceptional rental yields of around 7%, but with a catch. Purchasing a studio or a two-bedroom apartment in Saint-Etienne costs only 65,000 euros and 70,000 euros, respectively, but finding a new tenant quickly can be challenging when your current one moves out. In Limoges, the issue persists, with higher demand, but Perpignan offers better odds, with rental demand ratios of 30 for two-bedroom apartments and 17 for studios. City life here is for the daring or the financially conservative first-timers.
Bargain Penthouses in Paris: Own a Luxury Pad for Less Than the Price of a Car
The study also points to cities offering an optimal balance between affordable prices, attractive rental yields, and consistent rental demand. Cities like Nîmes, Besançon, and Metz boast rental yields of around 6% for studios and average budgets of 75,000 euros. Montpellier does well too, offering a rental yield of 4.49% for two-bedroom apartments, high rental demand, and entry prices of "just" 175,000 euros.
Add cities like Marseille, Lille, and Toulouse to the list. They combine high rental demand with reasonable prices, keeping entry costs between 170,000 and 190,000 euros for a two-bedroom apartment. Nice, however, offers both high demand and profits but at a hefty price range, making it a choice for wealthier investors.
Read More About- Real Estate Investment- Property Flipping- Rental Property Investment- Property Market- Rent Control
[1] Best Cities for Real Estate Investment in France: Balancing Affordability and Returns (2021)[2] Student Cities with Rent Potential in France (2021)[3] How to Maximize Your Returns on Airbnb Investments (2020)[4] Investing in Real Estate: Factors Affecting Property Prices and Rental Yields (2019)
- For risk-averse investors seeking stability over high returns, exploring real estate opportunities in heavily-populated cities like Paris and Lyon might be beneficial, despite their high costs and limited rental yields.
- Experienced investors seeking higher rental yields can consider lesser-known cities like Saint-Etienne, Perpignan, and Limoges, although finding tenants promptly might pose a challenge occasionally.
