What is guaranteed income?
Many developers offer a rental guarantee program — a fixed percentage of the apartment’s value for 3-5 years after purchase. Usually 5-7{4c3c43d1166a1d1dff527390f0aa80c2208b22b51fad691393a45f9289cfc652} per annum. It sounds attractive, but it is important to understand the mechanics.
How it works
The developer (or their management company) takes your apartment into management and pays a fixed amount monthly or quarterly, regardless of whether the apartment is rented out or not. Essentially, part of the apartment’s value is «embedded» in the guaranteed income.
What to pay attention to
Is the guarantee real: Check if the guaranteed income is specified in the contract and who exactly is the guarantor — the developer or the management company.
Guarantee period: 2-3 years is realistic. 5+ years is a cause for questions.
What happens after the guarantee: After the term ends, the apartment may generate less income if the market rent is lower than the promised percentage.
Condition of the apartment: Find out who pays for repairs and furniture replacement during the guarantee period.
Our opinion
Guaranteed income is a good marketing tool, but not the only criterion for choice. More important are: location, construction quality, developer reputation, and real demand for rent in the area. If the location is good — the apartment will generate income even without guarantees.