In the past few years, property investment has been termed as one of the safest investments that one can make. But when one digs a bit deeper, to understand how the system works; the risks come to your acknowledgment gradually.
The risks of property investment are no less. And they have been amplified in the past few years during the financial crisis, and around the world during the pandemic. Although a landlord has a lot of responsibilities and stress to manage; the risks of not finding the right tenant and not being able to generate the required rental are one of the most stressful aspects.
And as a problem comes forth, in any industry, a solution is definitely required. To help landlords manage stress and this fear, a rent guarantee scheme came into existence.
The usage of this scheme has soared in popularity in the last few years as it helps ease the stress for the landlords. With promised rent at all times and absolutely no responsibility on your shoulders; guaranteed rent can be the best thing one can opt for, especially in these challenging times.
What is Guaranteed Rent?
Guaranteed rent is an agreement between the landlord and a third-party company or individual. According to the functionality of this agreement, the landlord is promised a fixed monthly rental income by the third party income, for his/her property. Even if the company does not find the right tenant for the property, in the stated time, the company has to pay the landlord, by all means.
This simply means that you hand over your responsibilities and duties as a landlord to a third-party company for a specified time and enjoy the monthly rental.
The Pros and Cons of Guaranteed Rent:
Now, as with any other program or scheme, guaranteed rent also comes with its own set of advantages and disadvantages. It might be the best bet for some landlords but at the same time, some might not find it suitable for themselves.
To help you understand the pros and cons, and make the right decision; we have listed them below for you. Keep reading for a better understanding.
Pros of Guaranteed Rent Scheme:
Here are some of the most fruitful benefits of guaranteed rent:
1. Fixed Monthly Income:
As the name suggests, you will get a fixed, guaranteed monthly income from the third party company, for the agreed time duration. As a property investor, if you fail to find the right tenant for a long time, your investment does not go to waste and you keep receiving an income.
2. Fixed Date:
Tenants can be super unstable with the payments and it definitely adds up to the stress. However, once you have signed up for a guaranteed rent scheme, you receive the rent on the said date by the company. No delays.
3. Property Management:
Furthermore , they also manage your property on your behalf.
Cons of Guaranteed Rent:
As every program has its cons; so does guaranteed rent scheme:
1. Low Return:
The agreed rental payment is usually lower than what you can receive from a tenant.
2. Poor Management:
There is always a possibility that the tenant might not take care of your property like you would.
CONCLUSION:
Considering both the pros and cons of the guaranteed rent scheme, you can now make a decision whether you would want to opt for this solution or not. Some might find it a great getaway from duties for some time, while others might not. However, it all comes down to personal preferences and what suits you best.