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SCPI, an investment of choice to build your real estate assets

SCPI, an investment of choice to build your real estate assets

The Sociétés Civiles de Placement Immobilier (SCPI) allow you to build up a real estate portfolio without having to make a large initial outlay or a major savings effort. Whether it is a cash investment, a loan and/or a scheduled payment, collective real estate offers the possibility of pooling efforts and risks.

SCPI: investing gradually in real estate

Subscribing to SCPI units allows you to invest indirectly in real estate with a limited contribution, from a few hundred euros. The paper stone thus allows individuals to invest in all types of real estate without having a significant capital or savings capacity. It is nevertheless advisable to make sure that the investment is compatible with one's personal situation.

Some even go so far as to offer a programmed payment service. The principle is simple: the saver can make regular payments (monthly, quarterly or semi-annually), to acquire additional SCPI units over time and thus build up a real estate portfolio with complete freedom (it is indeed possible to interrupt and resume them at any time). The savings effort is thus adapted to your income, as well as to your personal and professional situation. This investment method is ideal for building up real estate capital gradually, at your own pace. The Investment in SCPI units should be considered over the long term.

To be noted:

Primonial REIM's scheduled payment service works like a subscription. The payments can be free or made on a monthly, quarterly, semi-annual or annual basis. They can be suspended at any time.

SCPI: Using the leverage of credit

To build up a real estate portfolio without any contribution, the leverage effect of the loan is a suitable solution. Potential income allows for the repayment of all or part of the monthly loan payments, which is why the investor should not rely solely on income from SCPI units to meet loan repayments. In the event of default on repayment, the partner may be forced to sell his or her SCPI units and bear the risk of capital loss. Depending on his personal situation, credit financing allows him to deduct the interest on the loan from his property income. The interest on the loan taken out to acquire the units is deducted from the share of corporate profits corresponding to the rights in the SCPI.

SCPI: a source of potential regular income over the long term

Over the long term, SPCIs have historically offered unitholders regular returns1, although these are not guaranteed in the future. Thus in 2020, according to the IEIF, SCPIs delivered a performance (TDVM) of 4.18% on average. Some management companies have done even better: the average TDVM of Primonial REIM SCPIs was 4.60% in 2020. These results have enabled investors to grow their initial investment and build up their assets gradually.

1 Source IEIF

What are the risks:

Investing in SCPI units involves a risk of capital loss. Income is not guaranteed and may vary both upwards and downwards depending on the performance of the fund and the economic and real estate market situation. The SCPI is a long-term investment with a recommended investment horizon of 10 years. Liquidity is limited, as the management company does not guarantee the resale of units. This liquidity of the units is less in case of dismemberment. And as with any investment, past performance is no guarantee of future performance.

In the event of a loan subscription, the subscriber must not take into account exclusively the income from the SCPI, given its uncertain nature, to meet his or her repayment obligations. In the event of default on the repayment of the loan granted, the SCPI units may have to be sold, which may result in a loss of capital, and the partner will have to make up the difference between the capital still owed (in order to repay the balance of the loan) and the amount resulting from the sale of his units.

For more information on SCPI, contact us!

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