Should you buy or rent?
Buying real estate is not an easy decision. Many parameters come into play and often conflict. The first consideration is naturally the cost of the property itself, followed by the loan interest rate and inflation.
Then comes the crucial question of debt scheduling, property market evolution, and ultimately the profitability of the transaction.
Given the complexity of the equation, renting is not inevitably a solution to dismiss. How can you know for sure?
The Value of a Good Simulator
Have you asked your financial advisor or a real estate specialist? They will inevitably sing the praises of becoming a homeowner without even clearly laying out the equation.
Neither your bank nor the real estate agency will do these calculations because both live off commissions from property sales.
To break from this logic, this site provides a particularly simple and effective real estate profitability simulator. Don't hesitate to run all your simulations.
Test and retest the hypotheses that seem relevant to you - it's completely free and trustworthy.
The Evolution of Rents
Before 2006, rents were indexed to the construction cost index. In other words, the owner could annually increase the rent within the limit of this index produced by national statistics offices.
Today the legislation has been modified and rents are now revalued according to the reference rent index.
The first observation that won't escape anyone is the inexorable increase in rental costs over nineteen years - we can easily measure this inflation at around 50%. Without going into technical calculations, we can estimate the annual rent inflation at 2%.
Conclusion
Real estate investment for rental purposes is not, according to our analysis, a solution to retain for owners. Recent legislation attempts to reverse this trend.
"Homo homini lupus est" - man is a wolf to man; this ancient quote still resonates today.