diversification at the service of your assets

When you are an investor, you have a golden rule: know how to diversify your investments as much as possible. For example, if you are investing in the stock market and/or cryptocurrencies, then moving to a property rental seems like a logical next step. However, you don’t necessarily have the time (or even the skills, at least not at the start) to get good returns in real estate. This is where SCPI comes in.

How to configure SCPI?

SCPI is a civil society made up of at least two stakeholders. SCPI is governed by Act No. 70-1300 of December 31, 1970.

As a first step, partners must enter into a partnership agreement. Thus, the partners decide to “unite to carry out activities and create the SCPI” (Article 1832 of the Civil Code) and express their desire to act “in the common interest and on an equal footing to share in profits as well as losses. This contract must be signed “freely and knowingly” by each interested party.

SCPI requires a share capital contribution (in cash, in kind or in industry) of at least €760,000. (Article L.214-88 Monetary and Financial Code). The usual steps are:

  • Drafting the charter of a registered company;
  • registration of RKS;
  • Publication of a legal announcement of the establishment of SCPI in the Official Legal Announcement Gazette.

Subsequently, in order for the investments to be profitable, the partners allow everyone to acquire capital shares. The founders of SCPI then take over all administration on behalf of the investors.

How does SCPI work?

SCPI is a civil real estate investment company. In short, this a company that buys rental property and shares capital with many investorsboth professionals and individuals. It is with this in mind that more and more investors are investing part of their capital in what is called paper stone. After purchasing the property with funds from various investors who purchase shares, SCPI will take over all management: dividends will be paid regularly (for example, every quarter).

We think that average SCPI margin is 4 to 5% gross. Of course, this rate corresponds to what the investor receives: all management expenses (works, related expenses, property taxes) are already deducted from this rate. Specifically, this represents a great boon for those who want to invest without wasting their time (or delegating) to real estate.

Thus, SCPI’s founders profit from the management fees they collect from investors (mainly through reallocated rent), subscription fees (to be able to integrate SCPI as investors) and concessions from a potential home sale by an investor.

Benefits of SCPI as a real estate investment

In his latest interview, Paul Bourdois, co-founder of France SCPI, highlighted the multiple benefits of SCPI: “(…) an investment with a high level of security, in a regulated market, with a moderate entry ticket and a high level of performance. Also, SCPI does not require any managerial efforts from the investor, unlike other types of investments (…).” This is also one of the reasons why investors value SCPI so highly.

Investing in SCPI: Between Security and Peace of Mind

Investing in SCPI has several benefits for people embarking on this professional property management project:

  • Investment security: by diversifying your shares, the risk of non-payment by tenants is significantly reduced. Thus, profitability never drops sharply: the more diversified your investments, the better.
  • Market regulation: Like traditional rental property, this type of investment is regulated by law.
  • Moderate entry ticket: sometimes only a few hundred euros are enough to invest in a rental property with SCPI that is far from a standard purchase, such as an apartment or even an apartment building.
  • High level of productivity: As France SCPI points out, the possibility of obtaining up to 6% yield. Moreover, for some so-called “profitable” SCPI indices, the minimum rate is 4%.
  • No management effort: it is essentially a completely passive investment. The company takes over all management, and the investor only has to wait for his dividends (rent equivalence).

Investing in rental property without the disadvantages

If you want to invest in rental property without having to deal with administrative and time-consuming daily procedures, then SCPI might be of interest to you. The good news is that there is investment in almost every conceivable area: housing, commercial real estate, offices, health, sports…

Areas are diversifying to meet the needs and expectations of investors.

Thus, SCPI seems like an interesting investment for professionals and individuals looking to diversify their property. The performance of SCPI, driven by Associate Founding Members, is designed to benefit everyone. Investors can more easily access housing provided by companies or individuals to increase turnover, and founders profit from administration management.

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