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Benefits of Pre-leased Properties. Why Pre-leased properties are good for Investment

Pre-Leased commercial property is one that has been leased to a tenant before being sold on the market. Following the sale, the lease is passed to the new owner, who then has the legal right to receive the lease rentals in the future.

In India investment in pre-leased commercial properties is rising day by day as it is giving stability so it is quite popular among property investors, entrepreneurs, and corporate houses. The buyer of a pre-leased property is guaranteed a settled return on Investment (ROI) from the start. The property investors earn a pre-settled rental income besides the Capital appreciation on the property that is purchased.

There are multiple benefits to purchasing a pre-leased property which we will discuss further in detail below

The benefits of Pre-leased properties are as follows

Assured monthly income/ regular assured income– Preleased properties are a great source of assured monthly income. When the investor gets the lease transfer of the purchased units, he got the legal right to receive monthly rentals. Thus, these properties ensure fixed and assured income each month. This income can be used to repay loans or to invest in some other property or purpose.

Zero waiting periods / No waiting Period– Investors do not have to worry about the tenant find or vacancy time, as the property is already leased out so rent will start coming from the very first day. The return on investment begins the very next day once the lease deed is transferred.

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Saves Time & Energy – unwanted circumstances when you buy any commercial property for investment purpose then you have to give it on rent, and to give property on rent is a tedious task, you have to find good tenant, you have to do meetings, and negotiations and in other hands in preleased properties you don’t have to worry about the tenant, as it is already there.

Capital appreciation– As the value of commercial properties is always appreciated but pre-leased properties appreciation is quite high. As pre-leased properties valuations are directly correlated to the rent they are getting. And in general, rent escalates every year or every 3 years. The buyers with a longer investment horizon may benefit from good appreciation in capital values as rent increase year over year.

Read – What is Pre-Leased Property? Benefits and Disadvantages of Pre-Rented Property.

High liquidity– While finding a potential buyer is tough in real estate because commercial real estate requires high investment but pre-leased commercial properties are easy to sell. Many investors prefer these assets, thus ensuring higher liquidity.

Security – Pre-leased properties minimize your risk since there is already a tenant paying rent. Secondly, you can earn steady rental income for long periods due to long leases and also enjoys the benefit of property appreciations.

The rental discounting facility from Banks for Loan– Lessors can get term loans at low-interest rates against the rental income of their pre-leased commercial property. This will help lessors raise more money on the underlying value of the property and the discounted value of the monthly rentals and you don’t have to put any collateral to get approved for the loan. Loan disbursement for pre-leased properties is calculated on the basis of rent paid by the tenant.

Lower risk– Investors face lower risks in pre-leased properties as they offer guaranteed income and handsome returns. The chances of tenants vacating these properties before the expiry of the agreement are very less until n unless some unwanted circumstances arise.

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Property TaxesThe burden of tax and maintenance dues may feel unjustified on unused property. With the property yielding rent, some of it can be used to pay up these expenses.

High ROI – Investing in commercial properties such as retail, office spaces, warehouses or banks fetches you 6-11% returns annually from just rental income. Commercial properties have also huge prospects of increasing in underlying value.

Conclusion

Investing in commercial properties which are already rented to tenants (Pre-Rented) is getting momentum among investors. IndustrialPlot.com can help you in finding a good pre-leased commercial property in India.

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