Best Tips To Rent Out Your Property

Under the Model Tenancy Act, 2021, the owner and tenant both have to sign a mutual agreement specifying the tenancy period, and all other related terms. Check this article for more information on tips and processes on how to rent out your property. 

While entering into the real estate business, we often think that there are only 4 main pillars for this business which are cash flow, low paydown, appreciation, and tax benefits. 

However, there is one important pillar that is generally ignored, which is research skills which are different for different people.  It becomes creative and easier with the time you spent in the business.

Here is a Feature of the rent out property.

Features Of Renting A House

The Model Tenancy Act, of 2021, states that the landlord and the tenant must sign a mutual agreement. This act reserves the right of the owner and the tenants as well. 

There are specific features of this act which are provided in the following:

• Agreement with tenants: Before renting the property, there should be a proper written agreement that must be signed by both the landlord and tenant. This agreement will include different elements like the tenancy period, rent specifications, security deposit, etc. 
• Security deposit: The security deposit includes 2 months’ rent for the residential premise and 6 months’ rent for non-residential purposes. The landlord will be liable to make valuable deductions from the security deposit and refund the rest of the deposit. 
• Tenancy period: When the tenancy period is about to end, the tenants can request to renew the extension of the tenancy period. The tenant is liable to pay enhanced rent when the tenancy period already ended and has not been renewed. The tenant is also liable to pay twice the monthly rent for the first two months and 4 times the monthly rent till the property is occupied. 
• Eviction: If there is a situation of eviction, then it can only be done when the tenancy period has been over, the tenancy period also gets ended, or the tenant fails to vacate the property after the tenancy period is over.  
• Sub-letting: Sub-letting will be prohibited with a supplementary agreement. The rent authority must be informed by the landlord and the tenants within two months from the date of execution. 

Also, read Important Rent Deposit Rules Of Model Tenancy Act, 2021

How To Rent Out Property

There are very simple tips that can help you with rent out property and they are explained in below points:

Understand the Market 

It is important to understand the market first before jumping into the business. There are many laws and regulations introduced to protect the interest of the owners.

The homeowners previously faced a lot of issues with the tenants. After the market boom in India, there has been the introduction of laws like The ‘Model Tenancy Act, of 2021’.

Under this act, both parties have to sign an agreement that will specify the rent, the tenancy period, and all other related terms.     

The Advantages

The property owner will receive two types of benefits. However, it is important to analyze the number of benefits for yourself and whether you can avail of the benefits or not. 

• • You will earn rent as a healthy income
  • You have to understand that your rent out property will be taken care of by the tenants
  • If you are staying out of India, then you might have to hire a professional who will maintain your property in the place of you 
  • You will have to pay tax under ‘Section 194 I – TDS on Rent. However, the current threshold limit is Rs 240000 

The Rental Value

You have to also consider the rental values in some of the major cities to decide your rent accordingly for 1 BHK and 2 BHK.

The average rent in Delhi is Rs 15000.

The average rent in Mumbai is Rs 25000.

The average rent in Chennai is Rs 15000.

The average rent in Hyderabad has gone down and now it is Rs 8000.

The average rent in Kolkata has remained the same this year and now it is Rs 4000.

Select the one you want to rent out

If you are having two flats, then it is suggested that you decide which property to rent out. For this, you have to compare the estimated monthly rent from both the properties and their maintenance costs. 

Calculate the rent

Rents depend on various factors like proximity, whether there is a garden or parking space available, maintenance costs, etc. There has been a rise in the rent compared to the previous year.

Around 5% of rent prices increased in India during 2022.

Documents required

There are three documents required for a rental transaction rental agreement, a leave and license agreement, and a lease deed.

These documents are important while renting out any flat for 11 months along with the cost of registration, stamp duty, and any other legal expenses which are equally divided among the licensor and licensee.

You have to also take proper tenant details for the verification. Taking permission from society is also important before the rental agreement is done.      

Also, Read How Much Security Deposit You Should Pay While Renting A Flat?

Tips For Renting A House

Real estate is a vast business with a lucrative investment option for everyone. However, you should also consider all the risks associated with it. 

Below are some tips which are required to be considered:

• Rental returns: It should be noted that in most cities the rental yield is around 2-3%. However, the rental return is always Inflation adjusted. You can revise the rental agreement every year considering the supply in the market. 
• Bear the potential expenses: If your house is tenant ready, it will attract tenants to put on an agreement with you. You should paint your house every time a tenant vacates. You should also do major repairs whenever there is a requirement. Consider these as an investment on your property to get a return from it. 
• Risk of vacancy: This is a common risk borne by the owners as a lot of time, the house can remain vacant after the previous tenant has left. During this time there will be a disruption in cash flow. It is important that when the tenants have notified you about their moving out, you start advertising about your vacant place so that you get the next tenants immediately.  
• Issues with tenants: Many tenants do not pay their rent on time and they also might misuse your property. This risk is always there, hence, you should be watchful of your tenants. 

Process To Rent Out A Commercial Property

There is a specific process for rent out property for a commercial purpose and they are explained in the following:

• Step 1 – Do proper research: Do proper research on what is the current average rental rate in the market. You should try to keep the rent rate justifiable for your property. Try to avoid adding any unnecessary rental charges to your tenants.  
• Step 2 – Advertising your property: If you are doing proper research on rental charges, then the next important step is to advertise your vacant property for rent. You have to put a notice on your society’s notice board taking RWA’s (Resident Welfare Association) permission. Then you can contact brokers or put one advertisement online to let people know about your property.  
• Step 3 – Police verification: When you have found a client, you should get police verification as well. You can get the police verification form online from the official website of the police department. Fill out the form and submit it with all the supportive documents. The police will do a background check and provide you with the approval.   
• Step 4 – Rent agreement: The rent agreement will include the start and end date of the lease and also the total period. The rights, as well as the obligations of both parties, will be explained in the agreement. The agreement will also specify who will be responsible for which damage.  
• Step 5 – Agreement registration: You should also get the rental agreement registered. This step is important to validate the rent agreement in a court of law.  

How To Rent Out A Commercial Property

Irrespective of the normal rent for domestic purposes, a person can also rent out their property for commercial purposes. 

There is a commercial lease agreement that is different from a normal rental agreement. A commercial leasing agreement is done when any property is leased out for a commercial purpose. 

Few laws will be followed to govern the agreements and the steps included for this are explained in the following:                                                                  

• You can hire a professional: Renting out a commercial property can be time-consuming. Hence, it is suggested that you hire a professional like a commercial real estate broker. This professional will handle everything on your behalf. The commercial real estate broker will only charge a specific amount when any deal is finalized by the client. You pay the professional only when you will get the payment from your client. 
• 3D virtual tour: The 3D virtual tour is the future of the real estate business. This virtual tour helps the clients to understand exactly what the property looks like exactly and how it would look when they take a lease of that property. This helps to serve the purpose of client. 
• Take drone shots: The shots from the drone would help you to provide your client with an idea about the surrounding of the property and what emergency facilities are available near them. This is also considered the future of the real estate business. 
• Billboard Advertisement: Billboard advertisements are easily visible ways for clients. You can try to make it look simple so that it serves the purpose of advertisement. There should be a precise explanation only which will help the clients to get the exact information of their selling point instantly.   
• Social media ads: Posting ads on social media is beneficial as it helps to reach many clients at a single point in time. You can narrow down your targeted audience from the huge audience list. You can use different graphics and creativities which will be eye-catching for the audience. 
• Joining real estate associations:  You can broaden your network by becoming a part of a commercial real estate organization. This will help you to develop credibility with and get access to the resources, and franchise owners, and continue the education opportunities. You will also get an impression of an established owner from the franchise owners. 
• Keeping everything easy: The real estate business for commercial property is not that complicated until you keep your message simple. If you keep these points in mind, you will have a steady flow of your fresh commercial real estate.        

Myths Related To Renting A Property

You may come across some myths related to rent out property. Some of the myths are listed below: 

• Myth 1 – You can earn a lot: It is a common myth that those who are into the real estate business will earn a lot of money. Some people have indeed been lucky, but in reality, this business requires a lot of research work which is time-consuming. You should make a proper plan to get client leads flowing. 
• Myth 2 – You should have prior knowledge of real estate: This is a myth that prior knowledge is required in this business. You can take the reference or knowledge as you enter into this industry. Surrounding real estate experts can help you to gain knowledge. 
• Myth 3 – Verify the leads: You might have great instincts to differentiate between good leads with bad leads. However, in this industry, you should not rely only on your instincts. Pre-screening is required and consistency is required. 
• Myth 4 – Only rent out those properties which are close to you: This is also one of the most common myths, that is to rent out only the property which is near to your house. The reason is you can be able to operate and manage the property well. In reality, it can be beneficial for you, but not necessarily the requirement. If you have a trustworthy representative on your behalf, then there will be no issues with profitability. You can see that a lot of successful real estate investors do not stay near their properties. 
• Myth 5 – You should have wealth to invest in this industry: You can take help from financial lending professionals who will help you to afford a property or its maintenance. 
• Myth 6 – Maintaining the property by yourself: Some maintenance tasks require taking advice from professionals. The charges might seem too much in the beginning, but gradually you will get the benefits of it.

Also, read Complete Guide On The Property Rental Valuation

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