“How to invest in real estate at a lower cost in Bordeaux?”, Interview by Thomas ABINAL, Monetivia
Investing in real estate in Bordeaux despite the increase in the price per square metre remains possible thanks to certain heritage solutions. Noting the dynamism of the real estate market in the Bordeaux region, Monetivia, historically based in Paris, is opening new offices in Bordeaux. An expert in heritage engineering, Monetivia specializes in real estate. As such, it has put on the market a new real estate investment solution. The Monetivia contract, an alternative to rental investment, more ethical and responsible than the traditional life. BORDEAUX Business spoke with Thomas ABINAL, co-founder of Monetivia to better understand the state of the Bordeaux real estate market. As well as the solutions available to investors.
What is heritage engineering?
This involves designing wealth solutions based on tax and legal developments to satisfy clients according to their objectives. The solutions are very extensive and the professionals who can accompany investors in their very varied approaches as well. We can start on the development of financial solutions with the creation of investment products, insurance …; prefer real estate investment…
In reality, heritage solutions meet a variety of needs. These needs depend on everyone’s situation as well. Families, retirees, singles, with or without children… On top of that, we are dealing with heritages that are also very different. Some benefit from large resources while others are in the process of building their wealth. Inevitably, this changes the proposed heritage solutions. But on the real estate side, there is often the possibility of being a customer regardless of its situation.
Before you talk about investing in real estate, what is the state of the real estate market in Bordeaux?
Monetivia has just arrived in Bordeaux so I don’t have a very precise step back on the issue. On the other hand, if we open an office, it is clearly because we are dealing with a very strong market. We are witnessing a rather spectacular development of Bordeaux over the past decade. We always talk about Paris as the flagship market. However, over the last 10 years, Paris has experienced price growth of about 25%. Bordeaux is closer to 60%.
At present, you will not have escaped the experience of a nascent economic crisis. Even so much so at the moment the effects at the level of individuals are not yet monstrous. Inevitably, thestate of real estate in times of crisis is not deconstruced with the national economic health. This has contributed to a halt to price rises but still not to a decline.
In reality, the crisis is news. But when you make investment, you look at prices over the long term. The real estate cycle matters, but not that much in the short term.
After a sharp and rapid rise for 10 years, it was normal to enter a stabilization phase from 2018. The factors that have manufactured the rise that no longer produce their effects therefore the whole its calm.
On the other hand, the demand for real estate is still strong, especially in the old one. For good reason, real estate is one of the two nipples of the traditional investor, along with life insurance.
Very few people do not want real estate in their wealth. Theold one is often the most reassuring because we are on real, existing, tangible assets. This is not a catalogue promise. Similarly, the investor does not need to be an expert in savings and investment. So while many investors are tetanus about what’s happening in the markets, the old one remains reassuring.
In recent months, both buyers and sellers have faced a glaring lack of visibility. Of course, this is not conducive to decision-making. Therefore, the volume of real estate investment is rather declining but real estate is still a common sense investment.
What kinds of real estate investments can be considered?
Realestateis an infinite array of solutions depending on the different possible projects. Already, you need to know what type of asset you want to invest in. Residential, commercial, office, logistics… Second, does the investor want to exploit it or delegate the management to an operator? In which case, we have senior residences, student residences… Then, in the case of buying an asset online, do we start on the new or the old? Do we choose an asset directly or rather to diversify the investments with paper stone? In the form of SCPI, for example.
The solutions to invest in real estate in the market are really plural. At Monetivia, it’s something else.
With the Monetivia Contract,we have demand to present real estate investment solutions in Bordeaux. As far as we are concerned, we are dealing with a fairly specific type of investor. They are interested inold real estate and are investing in a long-term approach.
In this context, alternative solutions are proposed that pass for example through the nude-property. That is, the customer buys the property but leaves it to someone else. It is a long-term, capitalization investment. Thus, it does not produce income at the moment. This way of investing in real estate attracts both French and foreign clients to build up a wealth.
We often find that people want to invest in a market they know. Bordeaux people want the product in Bordeaux. Even foreigners who want to invest in France want to do so in a city they know. Bordeaux is often one of the options. In addition, old real estate is quite local as an approach. It is real estate that exists, that we can visit. Unlike the new one, sold on plan.
Is investing in real estate accessible to all?
Realestate investment is characterized by a rather rare opportunity that is to invest by borrowing. This is not possible in many other investment sectors. This borrowing capacity to finance an investment is specific to real estate. It therefore opens the field of possibilities to people who do not have capital to invest but have regular incomes.
In a way, investing in real estate is one of the broadest and most open investment opportunities possible. Structurally, the interest of real estate is that it is possible for many people.
What kind of real estate investment does Monetivia respond to?
Monetivia has historically launched to offer the market an alternative to life-selling. The idea is that you have on the one hand the seniors, the over 65-70 years old, who are massively holders of real estate. Heritage that has also been greatly enhanced in recent years. These seniors are looking to sell their property while staying at home to free up cash. The goals are simple. They either want to enjoy retirementor be able to help their children… Anyway, they want toarbitrate their real estate assets. On the other hand, we have real estate investors looking for more efficient and less risky solutions than rental investment.
Monetivia released a solution 4 years ago: the Monetivia Contract. It allows to invest in the walls but by achieving a transaction much more balanced and healthy than the life sale that has existed for 300 years. Indeed, many seniors are reluctant to sell their property in life. First, not to sell their home. Then, not to sell it to a buyer who is betting on their death. As a reminder, life is from a dwelling that has a certain value. Then to make an assumption of the lifespan of its inhabitant to estimate the cost of the purchase.
So there was a very strong demand from both sides for a similar transaction in mind but less risky.
In practical terms, what is the Monetivia Contract?
The Monetivia solution resembles life but without the cynical and unhealthy side. It proposes a transaction with a price that balances and adapts in the future in view of the actual use time of the property. In other words, on the investor side, it makes sense not to pay the same price if you get it back after 2 years or 22 years. This makes it possible not to take the risk of the bet of profitability. On the other hand, it reassures senior sellers with children who do not want to sell their homes.
Monetivia has developed a solution to correct the sale equation,in partnership with Allianz Insurance. Nothing magical, the gait remains similar to life. Thus, we have a senior who sells his property, we find a buyer who pays him immediate capital. Except that two protective mechanisms are added. In the event of an untimely death, the buyer pays an additional price to his estate. Otherwise, if the buyer has to wait longer than the original hypothesis, the insurance compensates him so that he does not lose money.
Instead of betting on death, we remove the nauseating side of the life, which is to make a good move on the death of the seller.
If it’s not life, what category does it fall into, what category does it fall into?
In fact, we’re on abare-property investmentscheme. With this model, there is no risk of rental vacancy, no rental management, no taxation on property income because no income. In reality, revenues are converted into a reduction in purchase prices. This aspect of property taxation is advantageous because it is very heavy in France. For a rental investment, you end up with about 50% tax on income.
Monetivia therefore offers a solution to invest in real estate or monetize its property in good conditions. By moving to Bordeaux, we hope to develop this activity there over the 10, 20, 30 years that arrive. Since we offer long-term solutions,it is also a long-term strategy that applies to us as well.