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Pre-Leased Properties Featured
  • From ₹ 30 Lacs
Pre-Leased Properties Featured

Strata Healthcare Opportunity

  • From ₹ 30 Lacs
Hosur, Tamil Nadu
Leading multi-specialty hospital
  • ROI: 6%
  • Target IRR: 13.4%
  • Fractional, Hospital
Details
Rishi Dedhia
2 months ago
Rishi Dedhia
2 months ago
Pre-Leased Properties Featured
  • From ₹ 25 Lacs
Pre-Leased Properties Featured

Srata’s Gujarat Warehousing Opportunity

  • From ₹ 25 Lacs
Kadi, Gujarat
  • ROI: 9%
  • Target IRR: 14.4%
  • Fractional, Warehouse
Details
Rishi Dedhia
2 months ago
Rishi Dedhia
2 months ago
Pre-Leased Properties Featured
  • From ₹ 25 Lacs
Pre-Leased Properties Featured

Myre Capital VTP

  • From ₹ 25 Lacs
Bengaluru
SmartWorks (SubTenant Groww)
  • ROI: 7.4%
  • Target IRR: 15.9%
  • Fractional, Office
Details
Rishi Dedhia
2 months ago
Rishi Dedhia
2 months ago
Pre-Leased Properties Featured
  • From ₹ 30 Lacs
Pre-Leased Properties Featured

Strata KT Office Opportunity I, Mahadevpura, Bengaluru

  • From ₹ 30 Lacs
bengaluru
  • ROI: 7.42%
  • Target IRR: 13.05%
  • Fractional, Office
Details
Rishi Dedhia
2 months ago
Rishi Dedhia
2 months ago
Pre-Leased Properties Featured
  • From ₹ 30 Lacs
Pre-Leased Properties Featured

Strata KT Office Opportunity II, Mahadevpura, Bengaluru

  • From ₹ 30 Lacs
bengaluru
https://in.puma.com/in/en
  • ROI: 7.3%
  • Target IRR: 14.2%
  • Fractional, Office
Details
Rishi Dedhia
2 months ago
Rishi Dedhia
2 months ago

Pre-leased Properties in India

What are Pre leased Properties?

A pre leased property is one that is already leased to a tenant, generating rental income from day one of ownership. Whether it’s a commercial office space, a retail outlet, an industrial facility, or a pre-leased residential property, pre leased properties provide investors with the assurance of immediate returns without the hassles of tenant search or lease negotiations.

Understanding Pre Leased Real Estate Investment.

Pre-leased real estate investment means buying a property that already has tenants renting it. With pre-leased investment, investors can start earning rent as soon as they buy the property, so that they don’t have to wait.

It’s a way to make money from real estate without worrying about finding tenants. Investors just collect the rent and maybe sell the property later for a profit. It’s a good option for people who want a steady income from their investments.

Evolution of Pre Leased Real Estate Investment in India.

Pre-leased real estate investment in India has grown significantly over the years due to various factors. Initially, it was mainly large institutional investors who engaged in pre leased investments. However, with the emergence of online platforms and increased awareness among individual investors, pre leased real estate investment has become more accessible to a wider audience.

Platforms like Invest In Pre-leased offer opportunities for investors to invest in preleased properties across different sectors, including office spaces, retail outlets, and warehouses. The evolution of pre-leased real estate investment in India has provided investors with a convenient and easy way to generate passive income and diversify their investment portfolios.

Why Investors Should opt for Pre leased Property Investment?

1. Immediate Rental Income

One of the primary benefits of pre-leased real estate properties is that they offer immediate rental income to investors. Since tenants are already in place and paying rent, investors start earning rental income from the moment they acquire the pre-leased commercial property.

2. Minimal Vacancy Risk

Pre-leased properties typically have minimal vacancy risk compared to vacant properties. With tenants already occupying the space, investors don’t have to worry about extended periods of vacancy that could lead to loss of rental income, when it comes to pre leased real estate.

3. Stable Cash Flow

The existing lease agreements provide investors with a stable and predictable cash flow. Investors can rely on regular rental payments from tenants, providing a steady stream of income to supplement their investment portfolio.

4. Passive Investment and Regular Passive Income

Investing in pre-leased properties offers a passive income stream to investors with these Investments. Depending on whether it’s a fully owned pre-leased property or fractional pre-leased property, a fully owned pre-leased property may require responsibilities of property management such as tenant search, lease negotiations, and maintenance. But in fractions, with tenants already in place, investors can enjoy rental income.

5. Tenant Stability

Pre-leased properties often attract long-term tenants who are committed to staying in the pre leased property for the duration of their lease agreements. These tenant agreements could be from 3 to 30 years and one should always opt for higher duration and higher lock-in period from the tenant. This tenant stability reduces turnover and vacancy rates, ensuring a consistent income stream for investors for these pre leased real estate.

Types of Pre leased Properties for Investment

There are different kinds of pre-leased properties investors can invest in for stable passive income returns.

1. Office Spaces

These are commercial property where businesses work. They can be big or small and are usually in busy areas like central business districts . Investing in commercial office spaces generates steady rent for investors from companies leasing them. Invest In pre-leased recommends investing in A-grade commercial offices for least vacancy and maximum capital appreciation.

2. Retail Outlets

Retail outlets are shops or stores where people buy things. They can be in malls (but non professional run malls are a disaster), shopping centers, or standalone buildings. Investing in retail outlets means investors get to earn money from businesses renting these spaces to sell products/services.

3. Industrial Warehouses

Warehouses are big buildings where companies store goods or make products. They’re often in industrial areas or near transportation hubs. Investing in warehouses can bring in rent from businesses needing space for storage or production. Warehouses typically are in the outskirts of the city where land is abundant in supply and hence can see slow capital appreciation.

How Pre Leased Real Estate Investing Works

Pre-leased real estate investing is simple, as investors buy properties with existing tenants. They find a property, do their research, negotiate the purchase, and close the deal. Then, they start earning rental income right away.

Investors can choose to manage the property themselves or hire someone else to do it. Over time, they can monitor the property’s performance and explore ways to increase income or sell it for a profit.

Factors to Consider When Investing in Pre leased Properties

Rishi Dedhia, Co-founder, Invest In pre-leased suggests “When choosing pre-leased properties to invest in, there are some important things investors should think about, before making the move. Investing in A-grade assets at A-grade locations bought below or at par market prices offer an excellent investment proposition as they offer good rental yields (5 to 8%) and scope of capital appreciation taking the overall returns to 11 to 15% IRR. ”

Additionally, tenants who have invested in the property through expenditures on furniture or Fixtures, tend to exhibit increased stickiness.

Location

Look for properties in prime areas where businesses thrive like IT hubs, Industrial sectors. Busy locations often mean higher demand for rental spaces and better chances of finding reliable tenants.

Tenant Creditworthiness

Investors should ensure the businesses renting the pre leased property are financially stable and can pay their rent on time. Checking their credit history and financial status can help investors avoid potential problems.

Lease Terms

Investors should check the lease agreement to see how long the tenant plans to stay and if there are any special terms or conditions. Longer lease terms provide stability and steady income for investors, hence be cautious about the lease terms. Raj Shah co-founder of Invest in Pre-Leased Property cautions investors that “A lot of sellers may offer as high as 6 month rent-free period in exchange for a higher rental rate – which is a gimmick and should be avoided”

Net Rental Yield

Investors should calculate the net rental yield, which is the annual rental income minus the outgoings (property maintenance, property taxes, any other expenses) divided by the pre-leased commercial property’s value before making any decision. Higher rental yields mean better returns on investment. Offices typically offer 6 to 8% net rental yield, retail 4 to 6% and warehousing 7 to 9%.

Property Condition

It is essential for investors to inspect the pre-leased property to make sure it’s in good condition and doesn’t need major repairs or renovations.

Market Dynamics

It is profitable to understand the local real estate market and economic conditions. Factors like supply and demand, rental trends, and future development plans can affect the pre leased property value and rental income.

Ready to Invest in Pre-leased Properties?

With tenants already occupying the pre leased property, investors can avoid the hassle of finding tenants, dealing with lease negotiations, pre-possession repairs, etc. In order to gain benefits from pre leased real estate properties and enjoy immediate rental incomes, it is significantly important to conduct thorough due diligence on tenant profiles, lease agreements, and good property location to ensure stable rental income and minimized risks. Get in touch with Invest In Pre-Leased for best pre-leased property investments.

Frequently Asked Questions

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Pre-leased property investment has several benefits, some of the major benefits are instant and regular rental income, capital appreciation as the property’s value may increase which provides additional returns except rental income. High quality tenants occupy pre-leased property which ensures stability and low risk of vacancy.

Commercial properties like office spaces, retail spaces, Industrial properties, warehouses, healthcare facilities and educational institutes are the types of properties you can consider. Each type of property has its own potential of ROI, so choose the property based on your preferences of investment and goal.

When selecting pre-leased properties, following factors should be considered. Choosing properties in prime locations with good connectivity, amenities, surrounded with good businesses, and transportations. Credibility of the tenants, evaluating financial stability of the tenant and their reputation. Lease terms and escalation clauses and calculate the rental yield and aim for competitive yields based on market standards. Most importantly analyze the condition of the property, infrastructure and maintenance.

Pre-leased property investment can be beneficial, but understanding the tax implications related to it is also important. For fully owned properties, rental income is subject to a 30% stadard deduction i.e for every 100 rupees you earn as rent, you will be taxed only on 70 rupees. For fractional properties, if the invetment is made through a SPV (special purpose vehicle) then the income is earned as interest income – where the entire 100 rupees will be taxed. If the property gains value over time, these gains are taxable during reselling the property. 

All kind of money matters come with a risk, it’s essential to understand the risks before investing. Pre-leased investment includes risks like tenant risks, if the tenant defaults on rent or vacates the premises before the agreed duration, your income gets affected, so it is necessary to study your tenant before investing to lower the risks. Be aware about local market dynamics and economic conditions as real estate market fluctuations can create issues in your investment.

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