Assured Returns Vs Pre-Rented Property – Where to Invest?

March 26, 2022
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Nowadays, Assured Return is becoming a more popular concept in the real estate industry along with pre-rented properties. When it comes to an assured return, an investor earns a certain amount of interest which is decided by the developer of the project. However, investors in pre-leased properties continue to earn steady income since the day the property was leased out for sale. Judging by these two forms of investment, investors would be able to earn a good amount of steady income with better returns than bonds, or fixed deposits.

Recently, the initiative of assured return investment was introduced by many renowned projects in Noida. Many projects of Bhutani Group were listed among those assured return schemes to attract new investors. Bhutani Technopark, for instance, is the best property in Noida that offers buyers an annual return in advance after investing. Apart from this, a research report showed that Ultra-High-Net Worth Individuals (UHNIs) prefer to invest in pre-leased commercial properties that are of Grade A certification.

The assured return scheme provides great investment potential for senior citizens, whereas many companies have started to offer pre-leased property for sale to new small investors. Thus, here are some of the key advantages and disadvantages of assured return and pre-rented property, that would help to understand which investment type is better.

Advantages

Assurance

When it comes to assured returns, investors are provided with a fixed monthly income, while most developers also offer bank guarantees to add more security to the transactions. Pre-rented property, on the other hand allows the investors to get the lease transfer on the commercial units and receive monthly rentals as a part of the deal. These pre-leased properties ensure fixed and guaranteed income each month.

Less Waiting Period

Generally, investors in pre-leased properties do not have to wait for a certain period to earn interest. Almost all pre-leased properties have tenants, and investors get the opportunity to earn monthly income right after the transfer of the lease deed. Whereas, in assured returns, the investors get faster turnarounds and better tenant quality.

Lower Risk

In terms of pre-rented properties, investors usually face lower risk as they are offered guaranteed income from the projects. It is unlikely for a tenant to vacate their properties before the expiry of the agreement. When it comes to an assured return, then factors such as steady monthly income, capital appreciation and lower investment capital make this form of investment much more reliable.

Disadvantages

Tenant and Developer Quality

While considering pre-leased properties, there are certain possibilities where a tenant may not have a good financial position or credit history. This could result in a major drawback in terms of gaining steady rental income. However, an assured return, on the other hand, usually carries the risk of commercial sites not being leased or projects not being completed.

High Capital Value

Most pre-leased properties are always higher than the vacant commercial unit. The same case is also with an assured return, where most projects have higher prices in the same locality. Thus, the investor should analyze the differences in the price of the properties to make the right investment plan.

Duration of the lease

In pre-rented properties, finding the right tenant is a challenging task and time-consuming. The investors are advised to have tenants that are comfortable with a longer lease period. Though in assured return, investors do not get the right to choose the tenants, rather, the developer usually controls the entire process. This factor is becoming a major disadvantage to investors, as they won’t be able to select tenants as per their investment plans.

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