Rental Guarantee Investment Explained
A rental guarantee is a form of property investing where the seller offers a “guarantee” to the buyer. A specified amount of interest is agreed which is to be paid to the investor over a period of time.
Usually interest payments are paid back to the buyer monthly or quarterly.
An offer for a one bedroom condo worth 6,600,000 THB is purchased with a rental guarantee of 8% for 10 years.
This means that the seller is legally obligated by contract to pay the buyer 528,000 THB (8% of 6,600,000 THB) every year for the next ten (10) years as agreed on contract.
Meaning after ten (10) years the buyer has made 5,280,000 THB back in interest. We would have to deduct specific maintenance and management fees from this to come up with the net. Learn more about our charges and other fees
Remember that the buyer still owns the property and can continue to rent it out, resell it, or keep it for personal use at the end of the investment contract.
The important point is that the buyer’s 6,600,000 THB was not stagnant.
The best part of the rental guarantee we provide is the “Buy Back” offer. This means you can always sell the property back very easily. Buy back for rental guarantee terms at 10 years is 125%.
Looking back at our example with the 125% buy back we can begin to understand what a big difference this makes to the amount of interest earned.
฿6,600,000 invested at 8% NET p.a.= ฿528,000 per year ( ฿44,000 per month )
Over ten years = ฿5,280,000
With the Buy back guarantee of 125%. Original investment ฿6,600,000 + 25% ( ฿1,650,000 ) = ฿8,250,000
So our interest ฿5,280,000 + buy back offer ฿8,250,000 = Total Return of ฿13,530,000
Total profit with buy back over ten years is ฿6,930,000 ( ฿57,750 per month )
What makes the rental guarantee offers so attractive?
As we just mentioned, the “Buy Back” offer is what makes this rental guarantee so much more attractive compared to other investment opportunities you might find.
Lots of people invest in property calculating the potential monthly rental rates and multiplying that by 12 to see the full capacity of their investment then deducting all the other expenses. This tells them the maximum ROI they can get from their investment.
What most people fail to realize is the amount of work and experience it takes to manage a property to make sure it is rented out with maximum occupancy. Every month there is nobody renting your property you are losing potential income which is what so many buyers realize after trying to go alone.
Making a decent return comes with risks but this can be handled by a team of professionals for you.
During the agreed period of the rental guarantee investment, the full responsibility of managing the property is done for you. Removing any stress during those non-vacant times.
When your rental guarantee expires you can either resell the property yourself or take advantage of the BUY BACK offer which is available for each of the investment products on the website.
The rental guarantee buy back offer gives investors peace of mind knowing that despite any negative market swings during the investment period, they always have the opportunity to sell the property back with ease.
Buy back options below;
3 years=100% buy back
5 years=110% buy back
10 years=125% buy back
What are the potential problems of investing in a rental guarantee program?
One potential downside of investing in a rental guarantee program is that you will not have any real access to your property during the agreed investment period.
This is due to the party responsible for ensuring the rental guarantee is secure has 100% control over the property during the investment period.
The party, need to ensure the property generates enough income to pay you the rental guarantee each month. This cant be achieved if the buyer wants to take vacations or live in the property during that time.
There could be some other pitfalls with rental guarantee programs when dealing with other companies. If the company offering the rental guarantee doesn’t have the financial means to compensate in the periods the property is not occupied.
This is why it’s very important that you go over the contract and do some due diligence on your end to background check the party offering you the rental guarantee.
On another note it’s also important to make it clear if the property with the “Rental Guarantee Program” can be transferred to a new owner in the case you would like to liquidate your investment.
Details on Rental Guarantee offered on this website
|Transfer Rental Guarantee Product to Another Person|
|Can I As the Investor Cancel the Agreement|
|Annual Management Charges|
|FREE Interest Payments|
|Dedicated Relationship Manager||Included|