Which rental guarantee concept should I choose?
With investors constantly in search of secure investments offering healthy returns, investment properties and rental guarantee concepts have grown in popularity. As property is viewed as a relatively safe long-term investment due to the fact that it tends to appreciate in value in pretty much every major economy in the world, it is hardly surprising that investors are flocking towards it en masse.
The advantage with rental guarantee concepts is that they give that little bit of extra security for investors whilst at the same time taking away any potential headaches regarding the management of the property. After all, most investors choose investments properties as a way of generating a passive income so the last thing they want is to spend long periods ironing out any problems. With a rental guarantee concept, you simply purchase your unit and the developer or management company then take care of everything on your behalf.
The problem is there are now lots of rental guarantee concepts on the market so deciding which option is best for you can prove tricky. It is important that your chosen investment matches your risk profile whilst at the same time offering the returns that you are looking for. Schemes that have been in place for a long time or offered by large, well known brands are always your best option. Doing your research is important and it is important to establish why the company in question is offering the scheme and check that it isn’t a way of raising cash quickly as they have cashflow issues of their own.
Lots of these schemes are offered overseas and not in your ‘home’ country so you need to check on the local laws as well as having some knowledge of the political and economic position of the country. Can foreigners buy property in their own name? Is it a popular long-term destination and is it stable? These are all questions that you need to ask. If you are uncertain or have more questions than answers, do more research until you are 100% happy.
Some schemes that are offered are available in booming resorts with the 5-star hotels getting in on the act as they are looking to increase the number and types of room that they have available. These schemes are well worth considering especially if you are risk-adverse as although the returns are not as high as those offered by others, they do come with the backing of international brands who see the destinations as ‘places to do business’. These hotels, like bookmakers are rarely wrong.
There are a few of these types of scheme available in Thailand. Some are in completed projects whilst others are still under construction. One such rental guarantee concept which is completed and available within a 5-star hotel is in Pattaya. This scheme is in the Amari hotel and offers a guaranteed return of 5% p.a. for five years with projected earnings in following years expected to be over 8% p.a. Naturally, investors benefit from their investment being managed by a hugely experienced hotelier.
There are similar schemes available in Phuket although these projects are still under construction. The deals on offer are guaranteed returns of 7% p.a. with projected returns in excess of 10% p.a. forecasted in later years. These deals are available in hotels managed by Best Western and Ramada so once again well respected businesses.
If you are a risk adverse investor, investing in one of these rental guarantee projects concepts by the large hotels would appear a very shrewd move.