Can rental guarantees be trusted?

Feb 6, 2017 | Emerging Trends

We often hear the old adage “if it sounds too good to be true, it probably is” but how do we define “too good” and what are the reasons behind something being so attractive.

Over the centuries, investors have always looked at opportunities to make their money worker hard for them. The rates of return that can be expected obviously vary and must relate to that particular period in history but the concept always remains the same – investors want the best possible return for the smallest amount of risk.

The question with this is, is it possible? The general rule for investing is “low risk, low return and high risk high return” and every conceivable variation in the middle. Different Investments carry a different weight of risk and it depends on your own risk tolerance for what you are prepared to accept. Some cautious investors merely want to beat inflation whilst others want more generous returns either in the form of capital growth or as an income.

 

Investment properties have become increasingly popular in the last few years as they are seen as tangible investments, something that you can feel or touch, whilst offering excellent returns. In fact, it usually not down to economic reasons if investors fail to make a profit but instead down to poor management, the wrong location or the biggest problem of all – finding suitable and appropriate tenants.

Rental guarantees seem to be the answer to this problem. An experienced management team will take care of your property, it will be in an excellent location and the developer will themselves pay the rent and have all the headaches of finding suitable tenants. If sounds so simple and straightforward, all you have to do is purchase the property and ‘rent’ it back to the developer who in turn will pay you a handsome return for doing basically nothing.

So, can this deals be trusted? Obviously, a certain level of caution needs to be taken – some developers are more trustworthy than others and you must understand what is in it for them – after all, no one will offer you something for nothing without a catch. The beauty of one of these schemes, if it is provided by a reputable developer, is that there is plenty of scope for everyone to do very well.

Developers sell more of their properties at a quicker rate, therefore making the profits required as well as ensuring suitable cashflow whilst also making profit on the rentals themselves – they will sub-let your unit to a tour operator for example. To achieve this, they obviously need to make the deals attractive to investors so therefore offer higher rates of return than the banks, as after all, you will be expected to tie your funds up for the medium to long term.

One experienced developer offering such as scheme is the New Nordic Group in Pattaya who are offering a 10% p.a. rental guarantee for periods of anything from five to twenty years. The same scheme has been in place for around a decade and has proved to be very successful for all parties with many existing investors looking to purchase more units. The experienced management team and sound business model means that such as scheme can be trusted as the company has such a well-established track record.

So, if you are looking for an excellent return from a rental guarantee, look no further than what is being offered by the New Nordic Group – this is a deal that can be trusted!

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