Why should you invest in a Pre-leased Property?
Real estate has been a popular asset class for investors as it offers the dual benefit of capital appreciation and regular income via rent. Usually, after buying the property, they work on the interiors to create living spaces that can be leased at optimum rates. This involves a lot of work and planning. However, many developers offer properties for sale that are already rented out or leased to allow buyers to start earning rental income from the first day of possession. However, there are many things that you need to keep in mind while buying such a property. In this article, we will talk about the benefits of purchasing a pre-leased property.
Understanding pre-leased properties
As mentioned above, a pre-leased property is a property available to be purchased that is already been leased or rented out. Hence, when you buy a pre-leased property, you can start earning rental income immediately.
While pre-leased properties have been popular in the commercial real estate segment, the trend is catching up in the residential real estate segment. Depending on your budget, you can choose from a range of options available like apartments, bungalows, townhouses, duplex flats, etc.
The demand for such properties is usually high as investors are on the lookout for opportunities to earn assured regular income. Hence, you can earn regular income over the short-to-medium term and exit with reasonable capital appreciation.
Benefits of owning a pre-leased property
Pre-leased properties offer a range of benefits as described below:
If you look at the rate of increase in property prices, then pre-leased properties tend to rise faster than non-leased properties. If the property is located in a prime location with good infrastructure and amenities, then the rate of appreciation can be higher. Hence, if you have a long-term investment horizon, then you can look at a pre-leased property for capital appreciation.
Assured regular income
When you purchase a pre-leased property, the lease is transferred to your name. This transfers the legal right to receive the monthly rent to you. Hence, from the time you purchase the property, you start earning an assured monthly income.
No waiting period
When you buy a vacant property, you need to invest time and money on the interiors to create a house that is liveable. Once the interiors are done, you need to start looking for a tenant before you start earning a regular income. However, with a pre-leased property, you can start earning rental as soon as the lease is transferred to your name.
Pre-leased properties are always in demand from investors as they allow them to start earning rental income immediately and handsome capital appreciation. Hence, even if it is difficult to find a buyer for a vacant property, selling a pre-leased property is relatively easy.
When you rent out your property, you need to talk to the tenant to increase the rent at periodic intervals. This can be a hassle as tenants will try to keep the rent unchanged. With pre-leased properties, the lease agreements usually include a clause for a periodic increase in rents.
When you opt for a pre-leased property, you are assured of regular income and have a good opportunity to earn a high capital appreciation on your investment. Also, such properties are usually in high demand among investors making your investment highly liquid. Hence, it is a low-risk investment.
Some points to keep in mind while buying a pre-leased property
• Look at the quality of tenants offered as they tend to stay for a longer duration
• Make sure that you check the term of the lease because when the lease expires, finding a new tenant can take time
• Since rental is assured, pre-leased properties are sold at high prices. Hence, make sure that you research the market and consider all aspects before making the decision.
BramhaCorp has launched a pre-leased residential property in Balewadi, Pune called BRAMHACORP TOWNHOUSE. These are furnished studio apartments that are full-managed and pre-leased. With a minimal down payment and low EMIs, you can get assured rental returns for up to 14 years.