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Financing your project
Depending on your investor profile, we recommend that you to contract a bank loan to finance part of your buy-to-let investment: thanks to the leverage effect, the invested capital invested will generate a higher return on investment, while also allowing you the possibility of doing a 2nd project later.
For a project totalling 500.000 Euros, for a 1-bedroom in the prime location of Paris (including acquisition/renovation/furnishing/decoration/fees), you may find it relevant to borrow the major part of the required funds:
Exemple 1 : dynamic profile
Loan of 400 000 Euros and down-payment of 100 000 Euros :
- Annual interest rate : 3,9%
- Term : 180 mois (15 ans)
- Monthly instalment : 2 938 Euros/mois
- Monthly guaranteed rent: 2 080 Euros/mois
Return on investment of the project : 5%
Return on investment of the capital employed (downpayment) : 25%
Exemple 2 : prudent profile
Loan of 350 000 Euros and down-payment of 150 000 Euros :
- Annual interest rate : 3,9%
- Term : 240 mois (20 ans)
- Monthly instalment : 2 102 Euros/mois
- Monthly guaranteed rent: 2 080 Euros/mois
CONCLUSION : your loan is reimbursed by the rents !
Return on investment of the project : 5%
Return on investment of the capital employed (downpayment) : 17%