In the market,
There is a lot of Guarantee Rental Return, Guarantee Rental Management, consistent rental scheme (whatever that is so many this kind of terms)
What is GRR?
Guarantee Rental Return is a scheme that where upon completion, you have the Guarantee leaseback terms to developer so u can get rental income from developer for 3-5 years.
Too good to be true? Why there have such system?
Yes. Some location that developer done the research. That location have higher ROI. But they don’t want fold out too much money for this property, so they come out such packages.
How do I identify is this GRR is true?
1. Demand Vs Supply
We need understand what developer are going to do by this location.
Example:
Developer want to build student hostel. Do surrounding area have university and agreeable to get tenant for these building?
Developer want to build 4 star hotel, does the location are tourism area?
Always do survey do know what the need and reasonable of the location.
If there is not tourism area, but u are going to build hotel and giving Guarantee Rental Return, does this make senses for a business people?
S2. Who is the management?
Every developer will assign one management for Guarantee Rental. We need to know about background of developer
- Have they doing hotel experience?
-What have they done for their previous record?
If the management totally don’t have any experience, let think about it.
3. Think about resell value after GRR
Let say u are going to buy a small hotel room because of GRR as hotel, think about it.
Who are going to stay in a hotel after 3 years?
So that is my sharing about GRR!
And the end.
Does proper GRR appear in Malaysia?
Yes,but 70% in market are not true.
I guess 90% of GRR agent going to hate me after I shared this.
But I hope it will add value for investor before make decision on one property.
Thanks