Are you planning to invest in a property in an endeavour to enjoy good rental returns? If yes, our experts suggest a few tips in order to derive maximum benefits from your rental yields. Read on…
Choosing between a rental accommodation and an outright purchase can sometimes be extremely confusing, as they both come with their own set of pros and cons. While renting a home is an ideal option for bachelors, buying a home gives you a sense of ownership and stability in life. Hence, every individual has his her own unique needs that he/she seeks at fulfilling when they go home-hunting.
For those not sure about settling in a city, renting is a preferred option, given the lower costs involved. Rather than being coerced into taking a huge home loan and paying hefty EMIs for the next few decades, one could easily opt for a rental accommodation. “Couples with no children and singles could also opt for rental accommodations in prime locations as they are far more cost-effective than buying one on the outskirts of the city. It also provides better mobility wherein one could move seamlessly to a new destination without any worry,” says Surendra Hiranandani, Founder and Managing Director, House of Hiranandani. Therefore, it’s a known fact that rentals in the city are the need of the hour.
So what are the factors that have to be considered if a home-buyer is investing in a property only to enjoy the rental income that it will yield? Firstly, the home-buyer should look at factors such as location of the flat, amenities, good furnishing, presence of social infrastructure such as schools, hospitals and multiplexes, in order to get a good rental income. Secondly, understanding the market demand and trend is important. For instance, if the demand in a particular location is for 2BHK flats and instead, you choose to invest in 1-BHK, then you would lose out on many prospective tenants. However, experts believe that small configuration apartments that are ready for possession are considered ‘hot cakes’ in the rental market.
“Whenever a home-buyer plans to invest in a property with a clear intention of investment and rental returns, then it is advisable to opt for a small configuration apartment such as a 1 BHK unit or a compact 2-BHK apartment, as the cost of such apartments, is much lesser. And one of the main advantages of these small configuration houses is that they are very easy to rent out. Since a small apartment is a comfort configuration unit, you are exempted from paying a high property tax as well,” says Dhaval Ajmera, Director, Ajmera Realty. A lot of young working professionals and students prefer renting a small house as it suits their budget.
One also needs to check the rental yields of the property and the area before investing. “After a correction, it should give you at least three-four per cent re turns. Also, the state (fully furnished or unfurnished) of your house, decides the value of the rentals expected,” says Amit Wadhwani, Director, Sai Estate Consultants.
Car parking is another important criterion to address. “Nowadays, with most people owning a car, chances of a tenant looking for a rental property with a car parking space are high. A covered car park would help in generating higher rentals as well,” says Wadhwani.
Sharon D’souza, who invested in a 2BHK apartment in a gated community only for the purpose for renting it out, took note of the above mentioned pointers. “I invested in a semi-furnished apartment with an open car parking space and had rented it to a couple who had come to Mumbai from Bengaluru. The house has all the basic facilities including being in close proximity to the railway station, school and hospital and thus, I am getting a good rental income out of it.”
A legal agreement for 11 months is mandatory while renting out a property. The entire paperwork, related to renting out a property that includes the live-in license, police verification, maintenance, electricity bills, need to be evaluated before renting the house. While drafting the papers, one needs to ensure that the title of the possession and authority and ownership remain with the owner. In order to ensure seamlessness, going through a reputed and trusted firm is advisable. It’s a known fact that in a city such as Mumbai wherein people flock in large numbers for work, rental accommodation will always be a need. And for those looking at real estate for rental yields only, won’t be disappointed.
Source: Magic Bricks