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If one is looking at a proposal in Real Estate that offers higher returns and lower risk, Pre-lease property Investment will just be the right opportunity for you. Pre-lease property investment is the process of first securing the leases with tenants in advance, renting it out and then offering the property for Sale / Investment.
Pre-leasing property investment can benefit the Investor in two ways. First, by receiving steady monthly rental income during the duration of the lease and then by generating lucrative capital gains, when eventually the property is sold out.
Since investor gets an already leased out property and for a longer duration, Prelease investment is the most safe, secured and profitable investment option; thus making it an essential part of your Real Estate investment portfolio as an Investor. Pre-lease property has low risk as compared to other types of property investments because your income is guaranteed by the rents received from your tenants. Capital appreciation due to rising property values also contribute to the value of this type of investment. Buyer can also avail a Lease Rent Discounting (LRD) loan on the preleased property. It also offers taxation benefit as Interest on such loan will be deducted as expenses from the Rental income from such property.
Estimates of returns & lease duration of different kinds of pre-leased properties are as follows:
| Sr. No. | Type of Property | Returns (Annual) | Duration of Lease | Annual property escalation |
|---|---|---|---|---|
| 1 | Residential | 4 – 5% | 1 – 3 years | 20 – 30% |
| 2 | Banks office premises | 5 – 6% | 9 – 15 years | 15 – 20% |
| 3 | Retail Shops | 5 – 8% | 3, 6 – 9 years | 15 – 20% |
| 4 | Office & IT | 8 – 12% | 3, 6 – 9 years | 15 – 20% |
| 5 | Warehousing | 12 – 15% | 3, 6 – 9 years | 10 – 15% |
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- Prelease properties are one of the best property investments in the real estate.
- Prelease properties assure that you start getting returns on your investment from day one.
- Apart from the recurring rental income, your property investment also appreciates in terms of capital over a period of time.
- Generally commercial properties are preferred as prelease property investments over residential properties. This is because prelease commercial properties provide a better rental return, return on investment, than a residential prelease property.
- In Indian real estate market scenario today prelease properties that yield around 6-9 % in terms of returns are considered good prelease property investments.
Through our efficient planning & pre-leasing strategy, we acquire high quality & branded tenants to help you improve the yield that can earn on your investment. We do the negotiation with both the parties; the property seller and the company or tenant taking on lease. We do identify properties that are in good location and offer more amenities to tenants will be in high demand and can command higher rents.
For more details on our existing pre-leased property investment option contact us.
