Choosing Assured Return Schemes- While guaranteed profits may seem alluring as an option for commercial property investments, it is important to take a few elements into consideration before making a choice. The ins and outs of an assured returns scheme are influenced by a number of factors, including pricing and the developer’s track record. This blog provides a tick list of crucial considerations you should make before choosing such plans.

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Until the property is finished being built, the builder pays the investor a certain amount under assured return plans. The annual rate of return varies depending on how much the buyer has invested, and a portion of the cost must be paid in advance by the investment.

What is guaranteed return programmes?

In order to entice potential investors, commercial real estate developers provide investment plans with guaranteed returns. For a set length of time, these programmes provide a fixed or assured rate of return on the investment. A percentage is used to represent this predetermined return. For instance, a number of developers give investors 8 to 10 percent of their investment each year.

These plans are often designed as an early phase or pre-launch of a commercial real estate project. For a variety of projects in Noida and Gurgaon, developers like Bhutani Group & M3M Group have offered promised return programmes.

A checklist for buying commercial real estate with guaranteed returns

Before choosing assured returns programmes in the commercial real estate sector, bear the following points in mind:

Look into the developer/promoter:

Investigate the promoter or developer who is presenting the promised returns scheme thoroughly to determine their reputation and track record. To determine their dependability, study their prior work and client testimonials.

Pricing:

Compared to other commercial properties of a comparable type, those that offer guaranteed returns frequently have higher rates. To get a better notion of pricing, look at nearby properties.

Legal verification:

Verify the commercial property being sold under the ensured returns programme has received all the legal approvals & clearances from the appropriate authorities. Get legal counsel and carefully analyse all the investment-related legal documents, such as the developer agreement and the terms of the assured returns.

Financial viability:

Evaluate the project’s and the developer’s financial feasibility. To determine whether the developer has the ability to keep their promises of guaranteed returns over the allotted time, do your research and request a plan from them.

The following conditions:

Examine the assured returns scheme’s terms and conditions thoroughly. Pay close attention to the length of the guaranteed returns, the provided percentage, and any unstated terms that can affect your investment.

Market study and rental yields:

Examine the rental yields in the neighbourhood where the property is situated. To comprehend the dynamics of demand and supply that can affect rental income, conduct a market analysis.

Exit strategy:

In case you decide to sell the property before the period of assured returns expires, see if the scheme provides a workable exit strategy. Recognize the effects of such a quick exit on your returns.

Property management:

Determine who will be in charge of managing the property during the promised returns period. Make that the management is capable of looking after the property and dealing with tenant-related issues.

In general, it’s a good idea to refrain from investing all of your money in one guaranteed return programme. To lower total risk, you can also diversify your investments. Even while guaranteed returns can be alluring, consider the business property’s long-term potential after the guaranteed returns period has passed.

Conclusion

In conclusion, you may make a better judgement if you keep these factors in mind and do your due diligence. Have a backup plan in place in the event that the assured returns are not as promised. To determine whether the assured returns programme for commercial properties fits with your investment objectives and risk tolerance, take into account any potential risks and make appropriate plans.

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