Should you invest in new or old real estate?

The Buying real estate is a popular strategy for building wealth and generating additional income. But investors often have a question: should one invest in new or old real estate? Each of these choices has advantages and disadvantages that it is essential to analyze before buying a home.

In this article, we will compare these two options by discussing their profitability, taxation, available aids and pitfalls to avoid.

‍

‍

1. New vs old real estate: definition and main differences

When considering a Buying real estate, the question of choosing between a new property and an old property immediately arises.

What is a new property?

Real estate is considered to be nines when it was built less than 5 years ago and has never been inhabited. It can be a sale in the future state of completion (VEFA) or of a completed but still unoccupied property.

‍

What is old real estate?

One old housing refers to any property built more than 5 years ago and that has already been inhabited. This includes apartments in the city center, village houses or even old buildings with character.

‍

Comparison of the main criteria

‍

‍

Several devices have been emplaced to encourage real estate investment, such as the Pinel law for new buildings and the land deficit for old ones. These measures reduce taxes and improve the profitability of projects.

‍

2. Why invest in new real estate?

Investing in new real estate is a reassuring strategy for many buyers, especially first-time buyers and rental investors. The new one seduces above all by its level of comfort, its energy performance, its manufacturer guarantees, but also by the financial aid and the tax benefits that he proposes.

‍

An investment made easier thanks to purchasing aids

One of the main levers facilitating access to real estate in new buildings is the zero interest loan (PTZ). This system, set up by the State, makes it possible to finance up to 40% of the purchase price of a new home without paying interest (subject to resource and geographic area conditions). It is an ideal solution for first-time buyers wishing to realize their real estate project with a controlled budget.

In addition, new homes benefit from reduced notary fees, generally around 2 to 3% of the price of the property, compared to 7 to 8% in the old one. In some municipalities, a temporary exemption from property tax (up to 2 years) may also apply, reducing tax burdens at the start of detention.

‍

A modern, economical and work-free property

Acquiring a new property is also the assurance of enjoying housing that complies with latest environmental standards (RT 2012 or RE 2020). These standards guarantee a excellent energy performance, reducing heating and electricity consumption, and therefore household current expenses.

In addition, the accommodation is delivered turnkey, with modern materials and equipment, which avoids unpleasant surprises and renovation costs. In addition, the buyer benefits from the 10-year warranty, which covers possible construction defects or major defects for 10 years.

‍

Secure profitability and strong rental demand

From the point of view of rental profitability, new homes are particularly popular with renters, especially in urban and peri-urban areas where recent supply is rare. Their comfort, their compliance with environmental standards and the frequent presence of services such as an elevator, a parking lot, or a balcony, ensure their lasting attractiveness. This results in a lower rental vacancy And stable rents.

Finally, investors can benefit from the Pinel device, which allows a tax reduction of up to €63,000 over 12 years, provided that certain conditions of rent, location and tenant resource ceiling are respected (source: service-public.fr).

‍

3. Why invest in old real estate?

Old real estate seduced by its diversity, its financial accessibility and its potentially higher rental returns. Investing in the old also often means betting on a prime location And the Charm of architecture traditional.

‍

A more accessible purchase price and a wide variety of goods

One of the major advantages of the old one lies in its generally lower purchase price to that of the new one. This allows investors to aim for larger areas or more central locations for an equivalent budget. Indeed, older homes are more often found in lively neighborhoods, well served by transport, shops and schools.

Moreover, in the old one, the margin of negotiation is often more important, which can make it possible to obtain a better price, especially if work is to be planned.

‍

Attractive rental profitability

A lower acquisition cost combined with rents close to those of new buildings makes it possible to obtain higher gross profitability. On average, we observe returns of 5 to 8% in the former, against 3 to 4% in the new. This difference is particularly noticeable in medium-sized cities or working-class neighborhoods in the process of conversion.

In addition, make renovation work in an old home entitles you to land deficit, a powerful fiscal lever for investors subject to income tax. It allows deduct expenses and work property income, thus reducing the tax base (up to a limit of €10,700 per year).

‍

Aid for energy renovation

Investing in old housing does not mean giving up on subsidies. Devices like MaPrime Rénov' Or theeco-loan at zero rate (eco-PTZ) make it possible to finance all or part of insulation, heating or ventilation work, provided that companies are used RGE (Recognized Environmental Guarantor).

Integrating these aids into your investment strategy not only reduces the cost of work, but also increases the value of your property on the market and optimizes its energy performance — a key argument for tenants.

‍

4. What are the disadvantages of each investment?

The limits of investing in new homes

Buying a new home, although attractive, presents certain constraints that must be taken into account. In addition to the higher price, delivery times can be long, especially in VEFA. A project under construction can take several months or even years before it is delivered. This means that the investor will have to wait before collecting his first rents or moving into his property.

In addition, reselling a new home can be more difficult in the short term. A freshly delivered property has not yet enjoyed a significant appreciation in value, and competition with other recent real estate programs can complicate selling.

‍

The constraints of investing in old

One of the main disadvantages of old real estate is the need for renovation work. Some properties require expensive upgrades to comply with energy regulations and improve the energy performance of the property.

In addition, the management of an ancient property often requires more involvement. Between condominium fees, renovations and regular maintenance, the overall cost of the investment may be higher than expected. Finally, rental management expenses may be greater due to the need for more frequent maintenance.

‍

5. New vs old real estate: what to choose according to your project?

‍

Conclusion

The choice between invest in new or old real estate Depends on Investor goals :

✔️ The nine is perfect for those looking for a secure investment, with little management and immediate tax advantages.

✔️ The old is ideal for investors who want a higher rental yield, having time to manage works and ready to optimize their taxation through the land deficit.

It is essential to assess your budget, risk tolerance and investment horizon before making your choice.

An apartment hunter can help you find the perfect property. Mecaza accompanies you in all your real estate projects in France. With a network of 80 real estate hunters, we are bound to have a hunter near you. Discover our service here.

‍

❓ FAQ

Is the new one more profitable than the old one?

New homes offer tax advantages and increased security, but a rental yield that is often lower than the old one. It all depends on heritage objectives.

‍

What are the hidden costs of buying an old one?

Renovation work, compliance with energy standards and rental management fees can increase the total cost of the investment.

‍

Which option should you choose for a first real estate investment?

If you want a passive investment, opt for the new one. If you are ready to manage jobs and are looking for high returns, the former is more beneficial.

‍

‍