Top 5 cities for profitable rental investment

Have you decided to invest in real estate to supplement your income and generate positive cash flow? Forget big cities like Lyon, Paris, Montpellier or Bordeaux. Instead, turn to these five cities for your most profitable rental investment.

Factors that make a city profitable for rental investment

When it comes to real estate, there are a number of characteristics that make a city profitable.

A good ratio between purchase price and rental income

The ratio between purchase price per square meter and rent must be favorable to you. You therefore need to target cities where the square meter costs little, but rents at a good price to achieve satisfactory rental profitability.

Bear in mind that prices vary from city to city, but also from neighborhood to neighborhood. What's more, the rental price per square meter is not the same for a studio as it is for a three-bedroom apartment. This makes small surface areas more profitable rental investments than large apartments.

Low risk of vacancy

Your property investment will only be profitable if you find a tenant. That's why it's essential to choose an attractive city where rental demand is high.Demand must exceed supply.

When doing your research, focus on cities where:

• With a growing population;
• With a stable and diversified employment base;
• With a student population;
• Connected to a metropolis.

Taxation

Taxation plays an important role in calculating your rental return. Not all municipalities apply the same property tax rate. What's more, in some cities, you'll have to comply withrent controls.

Conversely, several cities offer tax breaks to investors. While the Pinel law is no longer in effect, the tax reduction provided for under the Denormandie law is still in force.

Five profitable cities for rental investment

A good rental yield depends on your objectives. However, a property investment with a return of between 8% and 10% is generally considered highly profitable. Here are some examples of cities where you can achieve these results.

Saint-Étienne

The capital of the Loire department, just 65 kilometers from Lyon, Saint-Étienne is often described as France's most profitable city in which to invest. Depending on the property, the neighborhood and the type of rental, you can expect a return of between 8 and 10%.

Despite the closure of certain industries, Saint-Étienne remains the Loire's leading employment area. Business activity is diversified, with opportunities in both the public (hospital, university) and private sectors. The city is home to the headquarters of the Casino group, medical equipment specialist Thuasne, as well as companies specializing in mechanics and metallurgy.

Finally, Saint-Étienne is home to several grandes écoles, a university and some 30,000 students.

Mulhouse

Located close to the Swiss and German borders, Mulhouse promises a gross yield of 7-9%. Despite a declining population, the Haut-Rhin sub-prefecture is one of the cities to consider for a profitable rental investment in 2025.

The Mulhouse area alone accounts for 5% of salaried employment in the Grand Est region. Stellantis, Eiffage and the hospital are among the main employers, alongside numerous SMEs in the freight, logistics and new technologies sectors.

Every year, some 8,000 students attend the University of Haute Alsace or one of Mulhouse's grandes écoles.

Le Mans

Le Mans is only an hour from Paris by TGV. Among other benefits, this Sartre prefecture offers rental yields close to 7% for real estate investors.

The tertiary sector is the town's most important source of activity, with the presence of insurers MMA and Covéa. Theagri-food (Yoplait, Bordeau Chesnel) andautomotive (Renault and NSN transmissions) sectors are also well represented.

13,000 students are enrolled either at university or in one of the city's grandes écoles.

Niort

With yields close to 7%, Niort has recently emerged as one of the most profitable cities for rental investment. The prefecture of Deux-Sèvres and its quality of life have already attracted 60,000 residents.

With an unemployment rate of just 5.4%, Niort is one of France's top performers. The banking and insurance sector (MAIF, MACIF, FLOA Bank) accounts for 27% of jobs, followed by commerce, administration and healthcare.

The metropolis currently has just 3,500 students, most of whom are enrolled at the Pôle Universitaire. But the mayor has set himself the goal of transforming Niort into a student city and welcoming 5,000 students by 2028.

Perpignan

Would you like to invest in the south of France? Then head for Perpignan. In this young, popular conurbation, some property investments offer gross rental yields close to 8%.

The Pyrénées-Orientales department has a higher unemployment rate than the national average, but economic activity is dynamic thanks to the Pôle Saint-Charles International, Europe's leading fresh fruit and vegetable marketing, transport and logistics center. Tourism, administration, construction and agrifood also contribute to the region's appeal.

Perpignan is home to 9,500 students at the Via Domitia university. The establishment offers over 150 courses, including an engineering school and an IUT (Institut Universitaire de Technologie), making it an attractive pool of potential tenants.

Our advice on securing your rental investment

High rental yields are often associated with higher risk-taking. Here are a few tips to ensure the success of your rental investment, whatever the city you buy in.

Choose a quality property

A purchase price well below the market may be linked to the quality of the property. Before you buy, find out about :

• The property's energy performance rating (DPE);
• Work to be carried out before letting;
• Co-ownership accounts.

Secure rent payments

To avoid unpaid rent, choose a solvent tenant. You can also require him to provide a joint and several guarantee. This can be an individual or a private guarantor such as Garantme. Our guarantee for unpaid rent (GLI) also ensures rapid compensation from the very first delay in payment.

Think about resale

Capital gains on resale are part of the profitability of your investment. You need to think about this right from the start, and define the ideal duration of your investment.

While no one can predict the future, find out about medium- and long-term projects in your city and neighborhood. Avoid atypical properties. Sometimes cheaper to buy, they are harder to resell on the real estate market.

Clearly, for a profitable rental investment, choose medium-sized towns with a good ratio between price per square meter and rent, such as Saint-Étienne, Mulhouse, Le Mans, Niort or Perpignan.