How does New Nordic’s rental guarantee concept work?
New Nordic’s rental guarantee concept is a simple yet extremely successful and well managed scheme that generates superb returns for investors, a profitable and sustainable business for the developer as well as desirable, well maintained properties for its guests. It meets the goals and objectives of all stakeholders through this well thought out and well implemented scheme – something that has taken years to perfect.
The rental guarantee concept, in New Nordic’s case involves of offering a 10% p.a. rental guarantee to investors who purchase one of their properties – properties that are designed with the investment property market specifically in mind. The group offers everything from studios to penthouses in their vast portfolio of properties that are based predominantly in Pattaya but also across Thailand and other parts of South East Asia.
Investors purchase a condo from the developer at the market value for the location and then immediately ‘rent’ it back to the developer for periods of anything from five to twenty years, depending on which property they buy and their own personal circumstances. The property is then managed and maintained by the developer for the duration of the ‘rental’ contract and the units are then sub-let to visitors coming to the resort.
Most the visitors come from tour operators, both domestic and international, with whom the group has well-established relationships and agreements guaranteeing bookings weeks or months in advance. Of course, bookings can be made direct with New Nordic themselves or other agencies who offer the available units to tourists. The guarantee of bookings means that group can plan future properties around market demands, satisfying both end users and investors.
As the group have completed literally dozens of projects and have hundreds if not thousands of units available to tour operators, there are no issues with cashflow for meeting monthly payments and monthly obligations. Indeed, New Nordic have been offering the rental guarantee concept for in the region of decade and have a tried and trusted business model – one that has met all these obligations on time and in full over the entirety of this period.
The business model is so well thought out and designed that it even takes into account the inevitable low season that all resorts experience. Minimal occupancy rates are required during these periods in order for the group to break-even and in fact, to date, these levels have been comfortably surpassed year on year. Prudence is a key word in all New Nordic’s planning.
One key factor in this rental guarantee concept is the fact that it is irrelevant to the investor if their individual units are occupied or not. The reason for this is because New Nordic look at all available units as a package and therefore all rental payments are apportioned likewise. Once again, it should be pointed out that monthly amount that investor receive is paid by the New Nordic Group and not a third-party, therefore guaranteeing that payments will be made on their due date.
Thanks to excellent infrastructure that the group have in place and the not insignificant fact that they already own the majority of the land earmarked for future developments, the projects continue to prove popular with investors, tour groups and tourists and will do for years to come. Excellent planning and fantastic management has ensured that the New Nordic rental guarantee concept has been a success in the past and surely will be for many years to come.
If you are an investor looking to get better rates of return on your capital, in an investment that is relatively low risk, the New Nordic rental guarantee concept offering 10% p.a. returns is surely an investment that is well worth considering.
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