Investing in real estate is often seen as a wise strategy for building wealth or growing capital. However, the equity contribution that is generally required can discourage investors or delay the transaction.
With its new formula, RGF, in collaboration with Hownvestor, offers an innovative and profitable solution that allows self-employed business owners to invest in real estate with as little as €7,500 in equity. This offer is also part of a broader strategy to protect business owners.
HOW TO INVEST IN REAL ESTATE IN BELGIUM WITH THIS NEW FINANCING OPTION?
The investment principle is simple: it involves purchasing real estate as joint owners, for which you contribute very little of your own funds. This model is made possible by combining three main financial elements:
- Limited personal contribution: you only need €7,500 of your own funds to get started.
- Taking out a bullet loan: the remainder of the financing is covered by a fixed-term loan, or bullet loan. This type of loan allows you to defer repayment of the principal until a later date.
- A passive co-investor: An external partner—the company Hownvestor—provides the remaining funds required and holds a share in the property. This is a passive investor, which means that it is not involved in the day-to-day management of the property, but receives remuneration for the duration of the investment and upon exit from the joint ownership, which will take place no later than 10 years after acquisition.
The concept of joint ownership allows you to share financial responsibilities while offering you an opportunity to increase your capital in the medium or long term.
WHAT ARE THE MAIN CONDITIONS?
In order to maximize profitability and ensure peace of mind for investors, the Hownvestor formula imposes several criteria.
Here are the main conditions that must be met:
- Investing in a new property: a new property is often more profitable in the long term and easier to resell. In addition, it is covered by a ten-year warranty and is more attractive to tenants, particularly thanks to its improved energy efficiency.
- Incorporation: this option is particularly suited to self-employed individuals and entrepreneurs who are incorporated and wish to build up private real estate assets, due to the conditions and specific features directly related to bullet loans.
- Acceptance of credit application: As with any real estate project, the credit application must be approved by the lender, an essential step in securing this type of financing.
By meeting these conditions, investors can take full advantage of the Hownvestor formula while benefiting from simplified management and increased long-term profitability.
EXAMPLE OF INVESTMENT
Let's take an example illustrating a real estate purchase of €325,000 including tax for a new apartment. Here is the typical breakdown of financing under this formula:
- Purchase price: €325,000 (including tax)
- Personal contribution: €7,500
- Credit: €252,500
- Co-investor's share: €65,000 In this case, the property is financed mainly by a loan taken out in the investor's name, and the passive co-investor contributes €65,000, or approximately 20% of the total amount. In exchange, their share is increased by a quarter, representing a total share of 25% (20% x 1.25).
During the investment period, the rent received will cover a large part (if not all) of the monthly loan payments. According to estimates, the difference between the rent received and the costs incurred—condominium fees, occupancy compensation paid to the co-investor, loan charges—is small, amounting to approximately €100 per month. This means that the investment is almost entirely self-financing.
Exit scenarios
The co-investor requests repayment of their share after 10 years at the latest. At this point, the property may or may not be resold. If you are able to repay Hownvestor without reselling the property, there is nothing to prevent you from keeping it in order to continue receiving your full rent and deferring the capital gains tax. For more details on the applicable tax regime, (see this article in L’Echo).
- Option 1: resale after 10 years
In this scenario, after 10 years of joint ownership, the property is resold, the loan is paid off, and the co-investor is reimbursed. Based on a 3.5% indexation of the property price, the balance should reach approximately €38,000 for €7,500 invested. This represents an annual return of 17.5%! - Option 2: buy back the co-investor's share and resell after 20 years
Another option is to buy back the co-investor's share after 10 years, then keep the property for an additional 10 years before reselling it. In this case, with an annual indexation of 3.5% of the property price, the potential profit after 20 years could amount to €232,500.
WHAT ARE THE BENEFITS OF THIS PACKAGE?
- Accessibility: one of the main advantages of the Hownvestor formula is that it makes real estate investment accessible to those who do not (yet) have significant capital or who do not wish to tie it up. With just €7,500, it is possible to acquire a majority stake in a property with high rental potential.
- Low monthly payments: the model is based on (near) self-financing thanks to rental income and the low monthly payments associated withbullet loans. This limits the monthly outlay required while generating long-term income.
- Flexibility upon exit: the two exit options allow you to choose the most suitable strategy based on real estate market conditions, but also on your situation at that time.
CONCLUSION
RGF's Hownvestor formula is an innovative, accessible, and potentially highly profitable solution for those who wish to invest in real estate with limited capital. This self-financing model, based on rental income and collaboration with a passive co-investor, offers numerous advantages for entrepreneurs and self-employed individuals.
However, it is important to bear in mind that this formula carries certain risks. Property valuation projections are based on an assumed annual growth rate of 3.5%, but the market could evolve differently. In addition, bullet loans require repayment in a single lump sum at the end of the term, which requires careful planning. The buyback of the co-investor's share after 10 years is also a key step to anticipate.
However, the basic model presented can be adapted to suit the objectives and situation of each investor. This flexibility allows you to maximize opportunities while taking the necessary precautions. Please do not hesitate to contact us for more information and to define a personalized strategy in line with your medium- and long-term financial needs.
By Julie G
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