Real estate investment in France is not just about finding a well-located apartment. Profitability primarily depends on decisions made beforehand: the type of property, the chosen tax regime, the financing method. In 2024, the market is going through a particular phase where older properties regain an advantage over new ones, and where credit conditions reshape the possible strategies for investors.
Investing in old or new: a shift to understand before buying
The most structuring data for a real estate project in 2024 is the decline of new housing. Construction starts have significantly decreased over the past two years, reducing the available supply and limiting purchasing opportunities in new properties at prices consistent with a rental yield objective.
In contrast, older properties are becoming the main playground for investors. Transactions in older properties are bouncing back after several years of decline. This recovery is explained by a stabilization of prices in many cities and by rents that continue to rise, which mechanically improves rental yields.
Why does this distinction matter so much? Because a purchase in new properties often involves a price per square meter that is much higher, with a delivery time that delays the rental process. In older properties, you can buy, renovate, and rent on a much shorter timeline. Renovation work also opens up tax advantages (deduction of expenses, property deficit) that do not exist in new properties outside of specific schemes.
You will find detailed analyses on the France Immo site for investment, particularly to compare yields according to property types and locations.
Rental profitability: the criteria that really impact yield
Many investors calculate their gross yield (annual rent divided by purchase price) and stop there. This figure is misleading. Net profitability after expenses and taxes is the only reliable indicator.
Here are the factors that reduce actual profitability and that too many projects underestimate:
- Vacancy: one month without a tenant per year represents a loss of income of about 8%. Choosing a city with strong rental demand (student city, dynamic employment area) reduces this risk.
- Condominium fees: in older properties, they vary significantly from one building to another. A building with an elevator, caretaker, and planned renovation can absorb a significant portion of the rent.
- Taxation: depending on whether you declare under actual property income or micro-property, the taxation on your rents changes drastically. The actual regime allows you to deduct loan interest and renovation costs, which can eliminate taxes for several years.
- Delegated rental management: entrusting management to an agency generally costs between 6 and 10% of the rents received. This cost is justified when the property is far from your home, but it eats into the margin.
A profitable project is not one that shows the highest rent. It is one where the actual charges were anticipated from the purchase.
Taxation of rental investment: choosing the right regime from the start
Taxation is not a detail to be settled after the purchase. It conditions the very structure of the project. Two main options are available to an investor in long-term rentals.
Unfurnished rental and property deficit
When you rent out an unfurnished property and your deductible expenses (work, loan interest, insurance) exceed your rents, you create a property deficit. This deficit is carried over to your overall income, within certain limits, and then to your property income in subsequent years. This mechanism is particularly interesting when you buy an older property requiring significant work.
Furnished rental and LMNP status
Furnished rental under the status of non-professional furnished rental (LMNP) allows you to account for the depreciation of the property and furniture. Under the actual regime, this depreciation reduces taxable income, sometimes down to zero for several years. The LMNP under the actual regime remains one of the most favorable tax frameworks for individual investors.
The choice between these two regimes depends on the type of property, the amount of planned work, and your tax bracket. A highly taxed investor will benefit more from the property deficit. An investor aiming for long-term wealth with little work will often prefer the LMNP.
Credit rates and financing strategy in 2024
Interest rates have significantly increased compared to the historically low levels before 2022. This rise alters the financial equation of any rental project, but it does not invalidate it.
With higher rates, the portion of interest in the monthly payments increases, which broadens the base of deductible expenses under the actual regime. A rate of 3.5% mechanically generates more deductible interest than a rate of 1%. Higher rates reduce cash flow but improve tax deductibility.
The duration of the loan also plays a role. A loan over 20 or 25 years reduces monthly payments and improves monthly cash flow, even if the total cost of the loan increases. For a rental investment, the priority is often to limit the monthly savings effort rather than to minimize the total financing cost.
Another rarely exploited lever: renegotiating the borrower insurance rate. The law allows changing insurance at any time, and the savings made over the duration of the loan can amount to several thousand euros.
The French real estate market still offers concrete opportunities in 2024, provided you think in terms of net yield, choose the right tax framework, and do not underestimate the impact of financing on overall profitability. Older properties with renovation, combined with an appropriate tax regime, currently represent the most solid foundation for sustainable rental investment.
