What is the profitability when investing in coliving?

 

What is the potential return with an investment in coliving?

Investing in coliving offers an attractive net return that can vary between 4 and 8% per year. This is an average return similar to that of the best SCPI products and high-yielding real estate crowdfunding companies. Obviously, to achieve the best returns , it is crucial to locate the coliving real estate project in an area with high rental pressure. It is also essential to buy a new property or build a building whose quality of equipment, installations and services can justify setting high rents. Another point to achieve an attractive annual return is to entrust the management of the property to a serious agent.

The latter will be able to analyze the solvency and economic profile of potential tenants to reduce the rate of arrears. You can request personalized support from a specialized company in order to invest in coliving while optimizing the project's profitability parameters. A turnkey rental investment company helps you quickly and simply find a property with high rental potential according to your expectations and your budget. By following your objectives, this service provider can organize the renovation, fitting out and decoration work of the property to offer a pleasant and original coliving experience to tenants. Finally, you benefit from high-level expertise serving your interests to obtain financing and optimize the profitability rate and Cash Flow.

You can also evaluate all the best rental management solutions to optimize the return on your investment in coliving. A wealth of experience in the field of real estate and in-depth knowledge of the evolution of coliving trends are fundamental prerequisites for the success of the project. This is what using a turnkey rental investment company with a high reputation brings you.

What are the favorable factors for investing in coliving?

For people interested in the profitability of real estate projects in the long term, investing in coliving allows them to calmly and consistently expand their personal assets. Here are some reasons which may explain the attraction of many investors to this type of project, despite the significant immobilization of funds at the outset. You have the option of investing via a SCPI or a real estate crowdfunding company to reduce your initial personal capital.

A flexible rental formula open to all

If coliving properties are very popular, it is because the real estate formula adapts well to the financial possibilities and stay needs of several targets. The tenant can benefit from a tailor-made offer with an all-in-one price for the living space and services (cleaning, wifi, maintenance, etc.). Nightly packages exist, even if the majority of leases last between 1 month and 1 year. For students and young professionals looking for high-end accommodation, coliving allows them to benefit from a secure, community living environment.

The coliving formula also interests tourists, expatriates returning home, professionals on temporary trips, people waiting to finish the construction of their main residence, etc. Freelance workers also appreciate this offer which facilitates professional mobility .

Turnover in co-living accommodation is high, but rental vacancies are extremely low. For each free space, there are generally many applications to become tenants. Tenants view coliving as a way to benefit from a hotel experience at a reduced price (they pay less than for a hotel stay). They are therefore prepared to pay a rent above the market price for a classic property, provided that they benefit from the comfort services for a “ready-made” experience.

Pooling expenses for water, electricity and even heating offers a very attractive rent considering the quality-price ratio. Thanks to the high occupancy rate of housing, it is possible to benefit from good profitability for the coliving investment project.

A low default rate

Compared to other types of rental investment, coliving investment appeals to investors because the default rate is low. The agent responsible for rental management ensures that he chooses the profiles which offer the best guarantees to avoid this type of problem. The agent's professional insurance also protects the investor in the event of non-payment. The phenomenon of rent smoothing is also very interesting for business profitability. The probability that all tenants will not pay their rent simultaneously over a long period is in fact extremely low.

The housing shortage in big cities

In large cities like Paris, Lyon, Marseille or Nantes, the ever-increasing land pressure encourages a reduction in the availability of buildable land in the city center. There will therefore be fewer opportunities to build new housing. The properties that will be built will have a very high price on the real estate market. At the same time, demographic developments and changes in the world of work support the increase in rental demand in these cities for the coming years.

In these urban areas which welcome many students and have great economic dynamism, the need for high-quality, inexpensive housing is set to explode. This situation creates favorable conditions for the development of coliving projects with high financial profitability . Alongside small programs and premium coliving residences, themed coliving projects (yoga, cooking, freelancing, etc.) could also develop.

An attractive tax regime

The tax regime also influences the profitability of the business. By investing in a coliving project, you can benefit from the non-professional furnished rental regime (LMNP). Rental income is considered industrial and commercial profits. Tax optimization requires choosing to tax these profits under the actual regime to reduce the tax base.

It is possible to deduct depreciation and operating expenses each year. In the event of resale of the property, you also benefit from a low capital gain. Here, the added value concerns the purchase price added to the amount of work and expenses , without including depreciation in the calculation.