Determine your residual real estate liabilities to ensure the best profitability of your rental thanks to your conciergerie in Cannes.
With nearly 1,4 billion euros invested in the field of real estate investment in 2022, stone asserts its place as one of the most popular investments in France. Far from being simple, this investment nevertheless presents a more than interesting possibility of diversification to make your property profitable. YourHostHelper specializes in the Airbnb rental business, one of the most lucrative avenues of rental buying. Only, to make the most of what real estate can offer, a rental project must take into account the immediate profit, but also the final return on investment, also called residual real estate liability. Your Cannes concierge will explain to you what the residual value is and how to determine it to make a profitable rental purchase on all points.
What is Residual Value in Real Estate
The residual liability is a value in savings that applies to an asset reaching the end of its use. That is to say, it is the estimate made on your home when you want to resell it after a few months or years. The residual value of your purchase is therefore an important indicator for any investor, regularly used by companies and professional lessors. Calculating the residual liability of your purchase upstream will allow you to choose the best investment to make between several homes.
Residual value is an important concept when investing in real estate. It makes it possible to evaluate the lifetime during which the asset must be used to allow a profitable investment and not to sell at a loss. A good investor evaluates a property in relation to its geographical position, to the monthly profitability that it is possible to generate during a rental, but also to the residual liabilities of his property according to the expected duration of the project. This concept makes it possible, among other things, to determine the minimum selling price to make the property profitable and the added value that it is possible to make.
In addition, the residual value of a property is taken into account by insurance in the event of a claim. Indeed, the compensation that will be paid to you will be proportional to your residual liabilities. However, as far as insurance is concerned, this value includes your entire home, including your furniture. Be careful when signing your insurance contract, because not all brands guarantee 100% of this value.
How to calculate the residual liability of a property
The calculation of the residual value can be defined as the value of the new property from which a coefficient of obsolescence is subtracted. This is what, in the case of insurance, will calculate your protection coefficient.
However, with regard to rental property investments, another calculation interests us. For a rental purchase, for example, the residual real estate liability corresponds to the purchase price of the property from which the sum of the accumulated depreciation is deducted. Residual value and depreciation calculation are therefore linked.
Let's take an example :
You want to buy a property for a total of €200. You estimate your net annual income at €000. After 12 years, the residual value of your property will be:
$200 — ($000 x 12) = $000.
Your depreciation calculation depends on your tax system, the costs generated by your purchase and the various taxes that will be imposed on you. You will then have to decide between a linear or declining investment calculation method. Determining your depreciation and the residual value of your property allows you, in a few calculations, to determine whether the initial amount when purchasing your property is viable or not. In addition, it will allow you to assess in an instant the value of your home once you have made the decision to sell it. You can then easily determine at what price to sell your property to remain profitable.
Why choose Airbnb rental according to your Cannes concierge
YourHostHelper is a franchise specializing in seasonal rentals, the most lucrative mode of rental in real estate. Our concierge service in Cannes is the historical base of YourHostHelper and has been supporting landlords for more than 10 years in their rental investment. During the reflection of your rental purchase project, you must evaluate the profitability of your property thanks to the depreciation calculations. The question of residual real estate liabilities is very interesting in the field of seasonal rentals, because it allows you to estimate the "useful" life of your property.
Indeed, for an object such as a computer, its lifespan is limited, oscillating between 5 years and 15 years (for the luckiest of us). Only, a real estate investment has an end only when it is decided. Thanks to this, your rental investment can, after a few years, provide access to a positive residual liability. This is particularly the case for owners who have finished paying the bank loan for their main residence.
This is even more true for Airbnb rentals. This allows your rental investment to amortize its useful life. In other words, to move more quickly to a positive residual value to profit from the sale of your home. Your Cannes concierge accompanies you in the Airbnb rental of your property and takes care of all of your rental management. We provide our owners with an average 25% increase in your rental income thanks to our knowledge of the seasonal rental market. Our Cannes concierge rates allow us to offer you premium services while remaining totally invisible in your budget.
Residual real estate liabilities are an important concept to master when you want to invest in rental real estate. In connection with the calculation of depreciation and profitability of your property, the residual value is an important indicator for determining the "useful" life of your property as well as its cost price. This notion will also be useful to you upstream of your project to determine if the initial price of the accommodation corresponds to your objectives. Your conciergerie in Cannes supports you in the management of your seasonal rental and allows you to influence your residual property liabilities by optimizing your rental income.
