What is guaranteed rental income?
A wholesale contract allows a property manager to purchase new inventory to manage it in retail, increasing sales. They then calculate the rent they want to receive and guarantee the landlord a fixed (lower) amount each month, regardless of whether the tenant pays or not. Before you buy an apartment for rent, check out Mashvisor’s investment property calculator to see rental prices and determine what rental price makes it profitable. By creating a market-derived price for property rental weeks, such marketplaces often make it quick and easy for property owners and property managers to reach an agreement and sign wholesale leases.
Through such marketplaces, property managers compete against each other by increasing the price offered and ultimately paid to property owners.
Are
rental guarantees worth it?
As with all insurance companies, guaranteed rental insurance is inherently reactive and wait for payment arrears to occur before they talk about a payout. According to the Ministry of Justice, this can range from 8 weeks to pay rent behind, up to an average of 41 weeks to redemption claims. For an example of a guaranteed rental system from the local authority, see the details of the Lewisham program here. In such cases, the owner would be paid even if the property is empty or the tenant does not pay rent. It is also important to only work with providers who can demonstrate membership in a relevant industry ombudsman service (such as the Property Redress Scheme) and a recognized system for protecting client funds.
