“Managing its rental profitability well”, Interview with Bassel ABEDI, Rental Yield

Real estate investment is popular, but it is not easy to properly assess rental yields. While real estate buying is increasingly being promoted in the spirit of investment and profitability, it is clear that real estate services are more in favour of sellers than buyers investors. Faced with this observation, companies are developing to bring more legibility to rental investment. This is particularly the case with Rental Yield, a Bordeaux-based company. Founded by Bassel ABEDI in 2016, it offers simple computer tools to understand the real profitability of a real estate. By the end of 2020, the platform has more than 9 million performance simulation calculations under its belt, and more than 11,730 assets under management. BORDEAUX Business spoke with Bassel ABEDI to better understand the challenges and constraints of rental investment.

What is the concept of Rental Yield? How did this company end?

Originally, Rental Yield was by me and for myself in reality. This was at a time when I wanted to invest in rentals and were looking for better legibility in the market. Often, when you’re an executive and you start making a good living, you wonder how to prepare for the future. I didn’t like the scholarship. Real estate on the other hand, it’s tangible, physical, we have the hand on it.

After that, it gets complicated because we have a lot of questions, but not necessarily answers. How do I decide? What to buy? Where to buy? Would such a choice be profitable or a financial abyss? At that time, no one could answer those questions. In fact, most real estate professionals are very oriented for the sale to be done. Not to accompany the final customer.

Fortunately for me, I am trained as an engineer and I was a project manager at Microsoft. I did a whole bunch of calculations for myself to determine whether a project was viable or not according to my objectives. Then I decided to put it online to make the process accessible. Turns out it met his audience. It must be said that it did not really exist for individuals. Since then, Rental Yield has allowed you to study a real estate purchase project with all the parameters and according to objectives. The tool allows to know the return, how much it will cost each month (taxes, taxes, expenses, credit, fees …).

Bassel Abedi founder Bordeaux Rental Yield
Bassel ABEDI, founder and CEO of Rental Yield in Bordeaux – Photo Credit Rental Yield

In practical terms, what services do Rental Yield offer?

The simulator is the largest product on offer. It is available in SAS by subscription. This is very useful for studying projects ahead of a purchase.

Then we developed other services. As a plugin that gives the effectiveness of ads on large real estate ad sites for example. Or a rental management tool. Remote lease signature, automatic release, tax return, financial statement… In practical terms, it is an automated self-service to manage your own rental investment.

How is it difficult to invest as a layman?

As novices, most people will forget a whole bunch of parameters. That is where it is complicated. Investing in real estate is much less simple than expecting interest from a book A. Works, expenses, trustee, credit and interest, taxes, rental management, insurance, tax and taxation… In the end, it’s a lot to think about. You also need to know if you can get away with renting furnished, empty, Bnb.

The questions that need to be answered are simple, the answers less so. How much is this going to cost me? How much will I have left in the end? Will the rent make up for all the expenses? How do I find the right property? On this last point, this is not the job of Rental Yield so we do not directly accompany investors. However, an ad alert system has been developed based on cost-effectiveness criteria to facilitate the search.

rental yield application real estate management
Rental Yield Application

Office real estate, warehouse, commercial premises, housing… How do you choose your rental investment?

Rental yield is more of a home. Furnished or nude, and in long duration rather.

Our tools are not yet fully adapted to the office. The investment in the office has peculiarities, in fiscal, technical, contractual terms.

In any event, there is no general rule of law which is the most cost-effective type of property. In any case, to choose well, you have to do a study, compare the different projects. To do this, you need to know where you buy, its characteristics. Downtown, or periphery, small town or big city.

If you want to invest in the city centre of Bordeaux, it is very likely that the office will be more profitable. If you choose a small town or an area near a school, the dwelling may well be more appropriate. The idea is to know what the demand is in the neighborhood.

More generally, it is often said that the office is more cost-effective than the home. In offices, the peculiarity is that you make a commercial lease. This type of lease is much less strict than the dwelling. The landlord has the option of adapting many clauses, including suring that the tenant assumes the burdens. The choice depends on the desired tax, but it is often interesting. It is this flexibility that makes office investing often relevant. The tenant can even do the work for you. But it is a very different project from real estate investment for housing. It’s not always about profitability.

Which cities in France are the most attractive to invest in real estate?

It is always difficult to answer that question, because it depends on your objectives. It is almost always worth investing when there is a demand for rental. But it doesn’t work the same way in big cities, medium-sized cities and rural areas.

Among the interesting cities for pure rental, we can mention Marseille. Prices are still relatively low compared to other major cities. Lille too may deserve to be watched.

After that, there are interesting cities for dynamism. This is the case of Bordeaux, Nantes, Paris… But they’re much more expensive. Here, the approach is very different. You have to be able to bear the costs, because they often have a low rental yield. In this type of investment, we rely on the most value for resale.

France also has medium-sized cities, such as Angers. These growing cities are very interesting. The price of real estate is still low for rents equivalent to other larger cities. There is a huge student community. So the demand is not ready to go down and we are looking mainly for small area, which is the most profitable.

Then, if you are looking for a very high return, you can target smaller cities. Simply, it is a more complicated investment. For it to work, you really need to know the area. Often, in rural areas, goods are aging. So it’s also an opportunity to stand out with a well-maintained. You might as well know what kind of person you’re going to rent it to. We have a more complicated tenant profile here. It requires more oversight, more involvement.

In practical terms, you need to know where you place the cursor between the risk taken, the effort required and the investment capacity.

bordeaux rental yield team
Rental Yield Team, Place de la Bourse in Bordeaux – Photo Credit Rental Yield

In and around Bordeaux, which neighbourhoods are the most profitable?

Bordeaux itself is very expensive. On the other hand, it has surrounding towns that have a better rental yield. For example, there are interesting areas like Talence. This city has a strong student community and great schools. It is also very close to Bordeaux and well served so it is attractive for tenants. But she, too, has become expensive. You can still find good deals if you leave on a property with jobs. The same goes for Mérignac.

We also have opportunities on the right bank. On the other hand, we are often on larger areas where profitability is less important than on small areas. In general, the whole metropolis is starting to become expensive. For rental yield to be good, you can find properties with a lot of work. With these criteria, even in downtown Bordeaux, it is possible to have good surprises.

How is Rental Yield doing? Has Covid-19 affected your business?

In general, we are not doing too badly. We did not need to resort to partial unemployment or downsize. On the other hand, we did have less turnover, so Covid slowed our growth. Investors could no longer visit the property so the projects were on hold. Not surprisingly, activity resumed as soon as it deconfined at pre-March levels.

We are also a little impacted by the second containment. However, as it is less restrictive and visits are allowed again, the decrease is less.

We were almost on a pace to double our turnover every year until 2019. Of course, this will not be the case in 2020 but the trend outside Covid continues. Since the beginning, Rental Yield has always been self-financing. Currently, the team consists of 16 people: executives, research and development profiles.

We take advantage of this period to move forward on our projects. We’re accelerating on things we’re going to launch next year. Communication, marketing, new products… We are still discreet on the subject, but we are in the process of completely rethinking the interface, the user experience. New products will be available in January. We also have a lot of new feature projects, which we will launch as we go along.

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