Compass Real Estate > Cambodia Investment Guides > Rental Guarentee in Cambodia is trustable or not ?

Rental Guarentee in Cambodia is trustable or not ?

1225
2019-08-22
Summary:Rental Guarentee in Cambodia is trustable or not ?

Foreigners purchase property in Cambodia basically for investment, but it is not convenient for foreigners to manage property in Cambodia for a long time, so many projects in Cambodia market are sold with leaseback, the so-called charter.
What is the defination of leaseback?
After-sale lease of commercial housing refers to the act of selling commercial housing by a real estate development enterprise in the form of leasing or purchasing commercial housing for a buyer within a certain period of time.
In Cambodia, after-sales lease is also known as "Rental Guarentee" (guaranteed rental return). It refers to the developer's commitment that, regardless of whether the house is actually rented out, the developer will give the unit's purchaser a certain monthly return of funds in accordance with the predetermined amount.
The advantages of leaseback:
1. The return on investment for the buyers is guaranteed.
2. Simple and efficient, avoiding the complicated process of leasing.
3. Relatively stable returns.
The disadvantage of leaseback:
1. leaseback has now become a means of sales for developers, actually, developer may covering up some of the problems existing in the project.
2. There may be an explicit or implicit premium in the lease project. The so-called explicit premium is nothing more than a comparison between the price of rental house purchase and the price of non-rental mode, while the implicit premium is embodied in the details of the Charter contract. If there is a need to pay an excessive premium for such services, careful consideration is needed.
3. The developers is not strong enough, which may affect the stability of earnings in the later period.

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