More profitable, furnished apartment requires more management
Posted on janvier 31, 2013 by Frank
Take a studio, add whatever is necessary life skills (table, chair, bed, wardrobe …), and possibly a few brushstrokes and « you can probably increase the rental yield of 15 to 25% « says Patrick Chappey founder Gererseul. com, rental management platform for donors.
For several years, furnished apartment in Montreal was growing. This trend has accelerated since the adoption on August 1 of the Decree on the regulation of rents, which affects only the bare rentals.
His first attraction is the flexibility of the lease. While its minimum duration is three years for rent empty, it is for one year only furnished (nine months for a student). « This formula is useful for those who want to keep the possibility to quickly return their property to use for their children or to sell, » said Maud Velter, legal director of Lodgis.
Another advantage is the risk of default is lower than the unfurnished. « It affects a wealthier clientele, students whose parents vouch, frames transferred, » says Chappey. In addition, rents furnished accommodation are comparable area, 15% to 20% higher than those empty slots. They are freely determined by the lessor, such as payroll and deposit.
Taxtion clemente
The tax environment is interesting: renting dwellings engaged in commercial activity, income from this activity are taxable under the category of industrial and commercial profits (BIC). If they do not exceed 32 600 euros per year, the micro-BIC regime applies automatically.
With, the key, an allowance of 50%. If the landlord believes that its expenses exceed this abatement, he is free to opt for the actual speed, which allows to deduct loan interest, depreciation of the asset …
An example: one owner, taxed at 30%, which leases 600 euros (excluding expenses) per month an empty slot in the end win 4907 euros net per year. If the same rent furnished apartment door and the rent 800 euros (100 euros including charges), he will receive 6216 euros net. 26% more.
Furnished but does not fit all. « The number one problem is the vacancy, » warns Mr. Chappey. To avoid this, the housing must meet the needs of the market – only studios and one-bedroom apartments are furnished coveted – and place in large cities with a reasonable rent.
The accelerated rotation of tenants also means being a good manager: it requires time and patience to manage well in the face of often demanding tenants. « You can delegate management to a property manager, but it will cost you 5% to 7% more expensive than renting naked, » said Maud Velter.
Think of maintenance costs
Before starting, you must also consider the costs of maintenance and renovation work. « They are more frequent. Equipment must be cared for and renewed in case of damage. Each piece should be furnished and should consider, if possible, to install a flat screen TV and Internet, » describes Mr. Chappey. Regulation of your condo should finally allow this type of rental.
Certainly, unfurnished rentals provide more stable income. « There is more demand and tenants stay longer in places, » said Nicolas Tarnaud, Chair and real estate company’s Management School in Reims.
But the legal system is more restrictive and tax less attractive, since the reduction is only 30% in the diet micro land. The actual speed, he can deduct rental income deficit land up to 10 700 euros per year, the balance may be carried forward ten years.