Preparing for retirement with real estate

Own your primary residence

Retirement often leads to a loss of standard of living due to a drop in income. To compensate for this, owning your own home at the time you stop working allows you to limit your expenses.

Thus, the acquisition of one's main property as early as possible in one's professional life allows one to repay the entire loan before the end of one's professional career. In the end, the fact of not having any more monthly payments to pay will thus make it possible to benefit fully from the retirement pension paid.

Buying a property to rent

Adopting a rental investment strategy allows the future retiree to do several things. The first is to build up a real estate portfolio that can benefit his descendants in the future. But above all, investing in real estate to rent out allows you to have an additional income when you retire.

Once again, by taking action before retirement age, it is possible to acquire several properties. In addition, it is possible to take out loans to finance the properties and the rents received can be used to repay the monthly loan payments. Once the loan has been repaid in full, these payments can be used to supplement retirement pensions. However, a loan commits its subscriber and must be repaid. It is advisable to check one's capacities before committing oneself. Loans entail a financial burden, which implies a commitment to repayment, and the rental investment does not guarantee the collection of rents or the fact that they will allow the repayment of monthly payments.

Choosing SCPI and SCI as a real estate savings solution

Investing in real estate directly poses the problem of the amount to be paid to acquire the property. It also requires a personal investment in the management of the property itself, but also in the search for tenants, the follow-up of charges and other expenses related to the wear and tear of the property. Investing in real estate via a SCPI (Société civile de placement immobilier) or a SCI (Société Civile Immobilière available as a unit of account within a life insurance contract) allows you to invest a small amount of money in collective real estate while being relieved of all the constraints related to the property itself, for a fee.

Several deductions are applicable according to the length of the holding period. A reduction of 6% applies to the tax on capital gains realized after the 5th year of ownership and up to the 21st year. A reduction of 1.65% in social security contributions applies over the same period.

Moreover, given the relatively low financial investment to subscribe to these products, it is possible to acquire shares of SCPI or SCI at any time. And this type of operation is also possible after retirement. Indeed, investing in tax schemes such as the Pinel or investing in non-professional furnished real estate often requires loans. These are more complicated to obtain after retirement. Finally, SCPIs allow you to claim potential regular income, which can be a complement to your retirement pension.

SCPI: some risks to keep in mind

Investing in shares of SCPI or SCI presents risks including the risk of loss of capital and income. The investment is considered to be illiquid and should be considered with a long-term view and to diversify the assets. The management company does not guarantee the resale of units. The potential income of the fund and the value of the units are not guaranteed. They may go up or down depending on the fund's performance, real estate market trends and economic conditions.