12% Assured Returns on Retail Shops | Studio Apartments

The real estate sector has risen up from a just a sale and purchase kind of ideology to an ideology that now focuses more on the investment options in different types of properties. People who are smart enough to know about the right place and right type of property to invest in are likely to get better future benefits from their investments.

Assured Return Investment is a scheme which works as a two way benefit scheme. This is a kind of property investment where the buyer makes an agreement with the seller for a monthly return amount of 9% to 15% from the total value of the property that is going to be constructed. The scheme is mostly for commercial spaces as these are slow moving assets which have a great potential of generating income after the construction is completed.

Some Important Facts About The Scheme

1. The scheme is introduced by the builders because they were not able to afford the interest rates that the banks were charging them on construction loans. Banks in India have an interest rate of 16% to 24%, which is way too higher for a developer who is trying to establish himself in the market

2. The builder makes an agreement in which he/she mentions the clause where the buyer can exit the deal after the completion of the project.

3. In other case, the buyer can continue with the deal and the seller would eventually lease the property to a tenant on a monthly rent basis the amount of which would be decided on grounds of the total value of the property in the market, for example - if the value of a property is 1 crore in the market, then the rent would be around 12 to 15 percent of the total amount, i.e. 12 lakhs to 15 lakhs. The buyer would either be provided with 1 lakh a month or 12 lakhs annually by the developer who has leased the property.

4. The developer may take an equal or comparably smaller share from the rent if there is an agreement between both the parties. The rent money is provided to a period of 3 to 10 years from the date of possession.

5. The developer would still pay the buyer until he/she has able to find a tenant. The selection of the tenant would not be the choice that the buyer would make as it is up to the seller.

6. Most of the properties on which the scheme is implied are not prime locations as these locations have a potential to get the desired occupancy easily. Properties that are situated in locked places are usually taken under this scheme. In fact, the builders mostly target commercial properties as they are slow moving inventory which requires a little help from outside for getting the right possession which would also help the builder to earn profits.

7. The location of the properties which are covered under this scheme is what that makes it possible for the developers to drop down the costs. Investors see these properties as a very good investing opportunity and those who are able to afford investment in more than one property are likely to get discounts on down payments and maybe higher interest rate.

8. It is necessary for the buyer to be fully aware of the property market situation when making the deal with the developer. Also, reading the agreement carefully would help you avoid any confusing thoughts that might pose a problem for you in the future.

The Assured Return Investment is a profitable scheme only for those who are well aware of the real estate market and know the legal loops and benefits that are used in these kinds of schemes. Therefore, it is suggested that you consult a legal advisor before investing in such projects.