It has always been appropriate to invest in real estate on credit. Sociétés Civiles de Placement Immobilier or SCPI are no exception. Why is investing in SCPI on credit a smart asset idea? That’s what we want to tell you together with La Centrale des SCPI, the leading online provider of SCPI shares.
Reason 1 for investing in SCPI on credit: Using a leverage effect.
The first reason to invest in SCPI on credit is to use leverage. Leverage refers to the use of debt capital to increase one’s investment capacity.
Leverage increases the profitability of one’s equity, provided the cost of debt is lower than the dividend income expected from the debt.
2nd reason to invest in SCPI on credit: Benefit from extremely low interest rates.
The second reason to invest in SCPI on credit is that the current interest rates for SCPI loans with a maturity of seven to twenty years are very low. As a reminder, it is expedient to let the end of the SCPI loan coincide with its retirement date in order to be completely debt-free.
As borrowing rates approach their lowest point, it is worth leveraging to increase purchasing power and wealth. While the best SCPIs net around 6% per annum, the best 20-year SCPI loans can be taken out for around 2% without insurance.
Third reason to invest in SCPI on credit: the savings cost is low.
The third reason to invest in SCPI on credit is that the savings effort is modest.
Let’s take the example of an investor who borrows 100,000 euros at 2.2% over 20 years and thus achieves an average annual return of 5%. The monthly repayment instalment is 515 euros. At the same time, the investor receives a monthly dividend of 416 euros.
The investor thus has a relatively low monthly savings effort of 101 euros before tax. At the end of the transaction, all other things being equal, he will have a capital of 100,000 euros and will continue to receive his dividends.
Fourth reason to invest in SCPI on credit: deducting the processing fees from the SCPI income.
The fourth reason to invest in SCPI on credit is that the processing fees can be deducted from the dividends received. This is of course only a one-time, i.e. one-time deduction, but it allows one to reduce one’s investment efforts.
It should be remembered that handling fees for investments in real estate often amount to around 1% of the capital borrowed, which is not negligible.
Fifth reason to invest in SCPI on credit: deducting the interest on the loan from the income from SCPI.
The fifth reason to invest in SCPI on credit is that the interest on the loan can be deducted from the dividends received. This means that one does not have to pay income tax or social security contributions on the cost of one’s loan.
In the case of income from European SCPI that is already exempt from social security contributions, you can also transfer your loan interest to your tax return.
Sixth reason to invest in SCPI on credit: deduct the premiums for credit insurance from your SCPI income.
The sixth reason to invest in SCPI on credit is that the premiums for credit insurance can be deducted from the dividends you receive. This means that you do not pay income tax or social security contributions on the cost of your loan.
However, the deductibility of credit insurance premiums only applies to rental income earned outside France. Therefore, the part of the credit insurance premiums paid for investments in a European SCPI whose real estate portfolio is wholly or partly outside our borders is not deductible.
Seventh reason to invest in SCPI on credit: In the event of a disaster, the SCPI loan will be repaid in full by the lending institution.
The seventh reason to invest in SCPI on credit is that in the event of the investor’s death, his heirs will not have to pay a single instalment of the loan and will be freed from the debt incurred by the deceased.
Of course, it is better not to face such a situation, but two precautions are better than one. Investing in SCPI on credit is like taking out death insurance for your loved ones.
Eighth reason to invest in SCPI on credit: It’s easy to find the best SCPI loan.
The eighth reason to invest in SCPI on credit is that it is easy to find the best SCPI loan. Instead of scouring all banks to find the best SCPI loan, since not all banks offer the best SCPI loan, don’t hesitate to get help from SCPI specialists, especially those at La Centrale des SCPI (01.44.56.00.23), the first SCPI comparison calculator on the digital stone market.
These men and women who have established relationships with banks will have the advantage of finding the best SCPI loan for their clients, saving them time-consuming steps that are not always crowned with success.
Ninth reason to invest in SCPI on credit: It is possible to invest in SCPI with a consumer loan.
The ninth reason to invest in SCPI on credit is that it is possible to invest in SCPI with a consumer credit, bearing in mind that the maximum amount for consumer credit is 75 000 euros.
Even better, those who invest in SCPI with a consumer loan do not have to pay brokerage fees, bank fees, administration fees or compulsory insurance.
Tenth reason to invest in SCPI on credit: All SCPI can be financed on credit.
The tenth reason to invest in SCPI on credit is that all SCPI are financeable on credit. The experts at La Centrale des SCPI work with various banks and brokers to get you the best financing for a customised portfolio of SCPI. In this way, it is possible to invest on credit in all SCPI available on the market.
Investing in SCPI on credit has always been a preferred means of increasing purchasing power and wealth. It is therefore essential to continue taking advantage of the current low interest rates to do so. With the specialists at La Centrale des SCPI, this option becomes even easier and allows you to prepare well for retirement with additional income.
Investing in an SCPI is not guaranteed, either in terms of dividends received or capital preservation. This is because SCPIs are dependent on the fluctuations of the real estate markets.
Before deciding to buy SCPI units, you should seek advice from a professional to ensure that this investment fits your asset profile.
Finally, take into account that SCPIs, like any real estate investment, are long-term investments with a minimum holding period of not less than eight years.