Guaranteed rent is when an individual or company guarantees to pay a fixed rent to the property owner. The property owner then gives the renter permission to rent the property to other tenants. This blog will discuss the following: reasons why property owners may choose guaranteed rent, the benefits of guaranteed rent to the renter and legal issues that both the property owners and renters should consider.
Reasons why property owners choose guaranteed rent:
The main reason property owners choose guaranteed rent is because it provides them with a peace of mind as their rental income is guaranteed regardless of whether the tenants who live at the property pay the rent or if the property becomes empty. A further benefit is that the property owner does not have to worry about costs related to any potential damage to the property. Instead, any damage to the property would be the responsibility of the renter. This is beneficial for the property owner as they would have greater security and would not have to pay additional fees in the long-term as they would also not incur any letting, management, or renewal fees.
Benefits of guaranteed rent to the renter:
Since the Renter takes a lease of the property, they then become the property owner for a set period. This allows them to find tenants for the property and they benefit by gaining profit from the amount of rent the tenants pay.
What legal issues should the property owners and the renter consider?
Property owners and the renter should enter a lease of the property for the period the Renter is going to pay the Guaranteed Rent. The property owners should also clearly state how much they are expecting the renter to pay and should set out the responsibilities of the renter at the beginning of the agreement.
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