Should one invest in a property that has been pre-leased?

What are pre-leased properties, and what do they entail?

They are properties that have already been leased or rented out and are currently on the market for sale. On theory, the largest win-win proposal for the buyer is that he or she would begin receiving rental revenue from the house right away.

This is the most valuable aspect of a pre-leased property, particularly if it has a long-term and reputable renter. After a brief halt caused by the COVID-19 pandemic, commercial real estate investments have resumed in India. Several investors, especially UHNWIs (ultra high-net-worth individuals), HNWIs (high net-worth people), businesses, corporates, and rich house owners, were discovering the importance of commercial real estate investing as a security net for lifetime revenue and greater development possibilities.According to estimates, commercial real estate can earn anywhere from 9 to 15% in rental yields, whilst residential buildings typically produce between 2 and 6%.

Given these facts, it’s no surprise that commercial real estate costs more than a dwelling property. If the property is pre-leased and generates regular rental income, the ticket length means increasing. Several wealthy investors and buyers are increasingly looking for Grade-A pre-leased commercial premises because of their ability to create income from day one and realistic break-even timeframes. Land parcels, industrial packages, warehouses, work spaces, commercial shops, and other properties are among them.

Pre-leased properties have the following advantages
  • Monthly income or rental returns that are guaranteed.
  • Property kinds have a higher potential for capital growth than others.
  • Investments with acceptable break-even timeframes and the potential for lucrative exits down the road.
  • Tenants of high-quality guarantee consistent returns and extensions.
  • The property will always be in demand if it is in a prime or rapidly rising location.
  • There are no dangers, so you can start earning right away.
  • From the start, there will be more liquidity.
The drawbacks of pre-lease properties
  • Price and early investment are significantly more than for typical commercial or residential properties.
  • There may be concerns with tenants not renewing their leases, resulting in a revenue shortfall until a new tenant is located.
  • Maintaining, repairing, and renovating the property in order to continue to attract high-quality tenants.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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