We source some properties with rental guarantees in place. Sometimes rental guarantees indicate the strength of the local market visible in the confidence of management companies giving a guarantee. In other cases rental guarantees hide weak rental markets and can even be subsidized or paid for entirely by the buyer in the property price.
In the latter case we would want to be sure that a rental subsidy was for short-term investor protection and that the rental market would grow significantly over the guarantee period leaving the investor in a strong rental situation afterwards.
Often, the rental return achievable in the open market will actually be above the offered rental guarantee. In this situation it is a personal choice whether to accept the guarantee, or to pursue the open market rents.
