Guaranteed Rental Return (GRR): What is it?

There is nothing better than an investment raking in large profits—except of course if it is guaranteed. After all, one of the reasons why investments are popular is the high reward that investors can get, especially if they make smart money moves. While this is not always possible to have sure-fire profits, when you buy real estate in Cambodia, it’s a reality that you can take advantage of in the form of a Guaranteed Rental Return (GRR).

Unlike rental yields where the profits depend on the estimated annual income of a property, as decided by the property owner, GRR is guaranteed by either the management company or the property developer within a time period. This means compared to rental yields wherein you have an uncertain range of potential ROI depending on your property location, GRR already offers you a clear certain profit from this investment.

General average percentage of GRR offered in properties is between 4% to 9% according to CEO of Huttons CPL Sharon Liew for two to five years. However, make sure the terms for the property you’ll get with GRR is written in a contract. This is to ensure you read the fine print and get the complete idea of what your profit will be like.

Additionally, there are a few things you need to know and consider about GRR as seen below:

  1. Property expenses deducted from given GRR 

While the GRR gives you the estimated profit within the time period, other property costs like taxes, utilities, and more are not yet deducted here. Make sure to deduct the other property fees to ensure you get the correct profit amount

  1. Property prices in the market

Do your research by checking the property prices and rental rates in the neighborhood where you want to buy real estate with GRR. Since most developers and management offices base it on this, it would be good to know if you’re given a great GRR deal.

  1. Developer & their reputation

It doesn’t hurt to confirm the reputation of the property developer offering a GRR on their properties. This ensures you know your money is being invested in the right place.

  1. After the GRR period

As the investor, you can take over finding tenants for your property and setting the monthly rent according to current market value. This way, you will have control of your annual profit as well over your property.

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