Guaranteed rent is a contract between a landlord and a third party for the control and management of a property. The third party pays a fixed monthly rent to the landlord and then tries to find their own tenants to rent the property out to.
In a nutshell, this means the landlord receives consistent payment every month at the expense of relieving control of their property. This undoubtedly removes the stress that comes with finding tenants and ensuring the property is kept in good condition.
But are there any negatives to guaranteed rent agreement?
Advantages of Guaranteed Rent
Payments On Time
The biggest benefit of guaranteed rent is payments being paid on time consistently. Whether the third party manages to get tenants or not, they still have to pay the landlord a monthly fee. This allows landlords to relax during the duration of the contract and not have to worry about payments.
No More Utility Costs
As soon as the guaranteed rent contract is signed, the third party is responsible for all utility costs. Therefore, this is a brilliant way for landlords to save money. After all, broadband and electricity expenses can add up and reduce profit.
Don’t Have To Deal With Regulations
Whenever a tenant moves into a property there are many health and safety regulations to go through. Once guaranteed rent is agreed upon, it becomes the third party’s responsibility to enforce all property rulings.
Disadvantages of Guaranteed Rent
Risk Of Damage To Your Property
With every guaranteed rent agreement there is always a chance the third party does not put the work in to maintain the condition of your property. The worst-case scenario is your property losing some of its market value due to becoming dirty and worn down.
Lack Of Power
When you sign a guaranteed rent contract you essentially give all the power to a third party. They will decide what tenants rent the property and there can be consequences if the residents do not treat the premises with respect. During the duration of the contract, the third-party’s decisions are final.