Thinking of investing in commercial real estate, but not sure where to begin?
That’s typically where most of us find ourselves, especially investing in commercial real estate for the first time.
If you find yourself at the crossroads of secured investments, give pre-leased investing a serious thought. In case you are wondering what pre-leased investments are and how they work, here is a walk-through:
What are pre-leased investments?
The barebones definition of a pre-leased property is one already rented out at the time of sale. This means the investor starts out with rentals right from day one translating into a steady flow of income over time.
Commercial pre-leased properties range from offices to retail spaces, industrial spaces, and mixed-use spaces. Investors prefer pre-leased commercial properties as these properties offer higher rental yields.
There is no doubt, when it comes to real estate investments, pre-leased commercial properties have their benefits.
How?
Let’s dive in:
‘Zero’ waiting period- The USP of pre-leased properties is fixed rental income from the day of investment, meaning, a zero-waiting period on ROI. The property is leased out by the developer, so the investor accumulates rentals right from the go as per the terms of agreement.
High ROI- Pre-leased commercial properties command higher yields between 7-14% subject to who the tenant is and what the lease terms are. Exit between 3-5 years is common, though investors can stay in longer depending on appreciation, returns, and objectives.
Stable Investments- Pre-leased properties have greater stability. Lease agreements usually last long, typically ninety-nine years, and extension is common. Such properties naturally tend to possess greater stability while offering higher capital appreciation over time.
Low Risk- Long lease tenures substantially lower the risk of a tenant leaving before the period of the lease expires. From an investment perspective, it offers a sense of greater security for investors who wish to stay in for long.
Minimum maintenance cost- Pre-leased commercial properties have low operating expenses as the tenant bears out maintenance and upkeep costs. The property undergoes regular maintenance while the investor does not have to pay for it. In most cases, these costs flatten out into zero-maintenance properties.
Lease Rental Discounting- Investing in a pre-leased property opens the proposition of what is known as Lease Rental Discounting (LRD). In other words, you can claim term loans against the fixed income (rentals) your property generates. The rentals serve as collateral for the loan. LRD brings two-fold advantages-low interest rates & long tenure of repayment. More importantly, it throws open a capital-raising avenue in times of need.
The above reasons underline why pre-leased commercial properties are lucrative opportunities where investors enter low and exit high. When investing in pre-leased commercial properties it is essential to consider the property location, lease tenure, and above all, the tenant profile to get the most out of your investments.
The location is particularly important for demand and supply analysis. A premier location with easy accessibility and sound infrastructure tends to have higher rentals and tenants with good brand value.
NCR: A profitable investment hotspot!
The wave of finest real estate developments has hit NCR, thanks to its advanced infrastructure, seamless connectivity, and employment opportunities. The Noida region is particularly at the centre of it as it embraces a landmark moment in its history, the Jewar Airport, a game- changer for the region.
The development has escalated property values in Noida Extension, Greater Noida, and Noida. Investors across the board are seeking opportunities to ride this massive wave of development and capital appreciation.
Prime investment locations such as the NX One Mall, Noida Extension, Greater Noida West’s biggest mall, are attracting investors with their pre- leased offerings that includes shops with renowned tenants like Bikanervala, The Smoke Factory, The BBQ Company, and Khatirdaari, among others. It is a great opportunity for pre-leased investing with well-defined break-even periods.
What is your action plan?
Pre-leased investing embraces security, appreciation, and returns. It has its well-defined merits, which is why pre-leased shops for sale in Noida are witnessing a surging demand.
That said, a trustworthy expert is vital in ensuring profitability over your investment term. Our teams bring you the expertise that put you on the road to long-term profiting, smart returns, and high appreciation investments.
For more get in touch with us.
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