Looking to buy an investment property and you have been offered a rental guarantee?

I met with a client today who is about to settle on a new investment property that has come with a rental guarantee. More often than not these rental guarantees will be funded by the money that you have borrowed to purchase the property. This means that any potential short for between the rent obtained and what they’ve guaranteed is going to be funded by the money that you have had to borrow from the bank to purchase what is now an overpriced property. I would highly recommend finding out what is a realistic rental amount for the area and type of building that you are purchasing and save the numbers stack up. These rental guarantees will only ever be for one or two years and then they will disappear, making them attractive from a percentage yield point of view for the short term. Please seek personal advice when making massive decisions around debt driven property purchases.

General advice only.

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