#151: Nadim Takchi - Livret P • Should you go into debt to get rich with rental real estate?
Description of the episode
When you want to use your debt capacity to invest in real estate, you often hesitate between buying your main residence and investing in rental property. The second option is interesting because it allows you to build up wealth while generating additional income. But, it requires a lot of effort: property search, negotiations, discussions with banks, work, tenant management, etc. Nadim Takchi (CEO of Livret P) embarked on his first rental investment at the age of 25. Nadim makes maximum use of its borrowing capacity and follows a rigorous investment methodology. Barely six years were enough for him to build up a heritage of 13 real estate properties. At the microphone of Matthieu Stefani, co-founder of CosaVostra, Nadim shares with us his method of rental investment based on debt. ## Why is it worth going into debt to invest in rental property? Obtaining a bank loan to invest in rental property allows you to benefit from a powerful leverage effect: the rents collected make it possible to cover all or part of the loan maturities. Result: the property is self-financing and the investor can even succeed in generating a positive cash flow (when the rent is higher than the loan repayment deadlines). It is an excellent way: to broaden one's assets; prepare for retirement; and create additional income. ## Stock market vs Rental real estate: Nadim's opinion Nadim prefers to invest in rental real estate. According to him, the return is more interesting, safe and creates value. He gives us the following example: a person has €10 in savings. It can either invest them in the stock market or use them as a contribution to invest in real estate. Scenario 1: she invests her €10 in the stock market and obtains a very high return of 000%. Annual profit: €2. Scenario 2: She borrows €100 and invests in real estate (using her €000 savings for her contribution). His apartment gives him a 4% net return. Annual profit: €4. Scenario 2 (more pessimistic than the first) produces a result twice as important. Knowing that real estate is less fluctuating than the stock market. ## Good practices for investing in real estate thanks to a bank loan Here is the list of good practices highlighted by Nadim during our episode: When you want to invest in a big city, take taxi rides, and ask questions to drivers. They know the best neighborhoods in town! Once you have targeted a specific neighborhood, go chat with merchants and residents. This is a good way to make sure the neighborhood is a good place to invest. Use your debt capacity to the maximum, to invest and benefit from an optimal leverage effect. Focus on “liquid” properties: they must be able to be rented at the right price quickly and be sold under the best conditions (quickly and without loss of value). Go through a broker to get the best possible loan. When visiting, ask to go first. If you like the good, make an offer very quickly. When you find a property to buy, ask different real estate agents what they think of the selling price. Some may offer you a similar property for a better price. Buy without condition precedent: it is very risky, but if your situation allows it, it reduces the cost of acquisition. Always negotiate the purchase price and the borrowing rate, in order to benefit from the best possible conditions. You can follow Nadim on LinkedIn and discover Livret P here. Pros: Good news! With the code MARTINGALE, you benefit from 10€ offered during a first investment at Livret P. And you will receive the Excel file used by Nadim for its rental investments.