The way rent guarantee works is this; You, as a landlord or property owner, are assured a certain amount (of rent) each passing month by a third party group, while still handling tenants management and property maintenance for you. This happens regardless of whether the property is occupied or not. Sounds interesting, right? Of course, it is. Who doesn’t love to get paid whether there’s a tenant or not?
Letting out a property comes with certain risks and a lot of responsibilities. Hence, these schemes help to minimise the various risks associated with rent arrears, damage to property or other issues which exists.
Here are five (5) ways guaranteed rent secures consistent monthly income for landlords:
- Payments Even In Vacant Periods:
One of the main benefits of guaranteed rent is that landlords receive a fixed monthly income regardless of whether the property is occupied or not. It is a way landlords receive fixed monthly income, which eliminates the uncertainty and financial stress associated with periods of no rental income due to vacancies in the property.
- Generates Steady Cash Flow:
Guaranteed rent provides a means for consistent monthly payment which brings steady cashflow and helps improve personal finance. This stability can be especially beneficial to landlords who rely on rental income to cover mortgage payments and other property-related expenses.
This means that even if there are no tenants or if they’re not able to pay for some reason, landlords still get a fixed amount of money every month. It’s like having a safety net. This way, you don’t have to worry so much about your income going up and down and could help you feel more secure about the money you’re making from your rental property on a monthly basis.
- Provides Tax Relief
Tax relief can play a role in securing a consistent monthly income for landlords who participate in rent guarantee schemes. While tax relief itself doesn’t directly provide income, it can help landlords mitigate their tax liabilities and maximise their net rental income, thus contributing to overall financial stability and securing their income.
- Saves Costs of Maintenance and Repairs:
When landlords are relieved of the duties on the cost of things as repairs, upgrades, and other expenses related to the property, it helps secure their income. This means they don’t have to take as much money out of the rent they receive each month to cover these costs. So, the more they save, the more money they keep in their pocket, making their income more predictable.
The property management company often takes care of the routine maintenance and minor repairs, ensuring that the property remains in good condition and minimising additional expenses on the landlord’s income .
- Reduces Financial Risk:
Guaranteed rent schemes transfer a certain level of financial risk from the landlord to the property management company ensuring that the profits of the landlords are not tampered with. Landlords are protected from scenarios where tenants might default on rent payments which in turn secures their monthly financial benefits.
Conclusion
It’s important to note that while guaranteed rent schemes offer these benefits, landlords should carefully review the terms and conditions of such arrangements. Not all guaranteed rent schemes are the same, and some may come with specific limitations, fees, or contractual obligations.
Before entering into any agreement, they should conduct thorough research, seek legal advice if necessary, and choose a reputable and reliable property management company or agency to ensure the terms are fair and suitable for their individual situation.
