Pre-rented Property is basically a residential, commercial, or Industrial property that is already rented to a tenant and fetching rental in regular basis to the owner of the property. Pre-leased or rented property is considered the best investment or safest option in real estate sector nowadays.
Why do people invest here?
There are several reason to invest in pre-leased or rented property. Those are:
- Building or office space would be ready to move so no fear of delaying in possession and poor construction quality.
- Profile of the tenant can be checked as well as his financial background and lease terms can also be verified. Thus no point of getting cheated.
- Since the property is ready to move hence people don’t have to pay GST.
- Get benefits under Income Tax
- Verification of building as well as Tenant is possible since buying this kind of property which is ready to move and the tenant which has about to come can be verified any time.
- Pre-leased Property is liquidatable real estate investment. So during the bad phase of life, it comes handy.
- Rentals earned from the kind of property is exempted from tax (i.e. up to 30%).
- Buying pre-rented property doesn’t involve risk alike investing in stock market. Because how bad is the market but this property would never become zero.
What decides the rental yield here?
No doubt, in pre-rented property the entry price is one of the greatest factors in determining the yield. Lower the price of the property, higher the yield. Another important factor is the quality of tenants. If the tenant is in a bank or an insurance firm, mainly PSUs, then the property commands a rental yield of 6% to 8%. These tenants stay for a longer tenure and the property is less prone to hopping, as well as it commands a lower yield. Commercial properties occupied by multinational firms for their office purpose, such as foreign banks, investment banks and so on, or domestic companies like BPOs and ITes units as tenants generate high revenues, say it in the range of 8% to 12%. Pre-rented office Noida are in great demand nowadays for these reasons only.
Generally pre-leased or pre-rented commercial properties provide fixed income. Here, the aim is to lease out to the quality tenants, earn lease rental over a 3-5 year tenure and subsequently exit with a moderate to high financial appreciation. There are mainly two types of pre-rented commercial properties.
- The first one is the lease-hold property. It mainly offered by government institutions; they are leased to the buyer generally for a period of 99 years, extendable further. Here people actually get rights to use the property and not the property for selling. In a way, they are buying a property without really owning it. Though they have limited rights on what to do with the space.
- The second is a freehold property – Owner becomes the exclusive owner of this property as well as the land on which it is constructed. It gives more right as well as responsibility to the owner. Pre-rented property for sale in Noida, are in high demand nowadays.