Investing in a property is one of the wisest choice to expect good returns of your savings. While the property prices are soaring up every day and GST is about to make its waves, it is high time we consider the seriousness of the word ‘Investment’ and do the necessary thing. On the other hand if you have already invested in real estate and are clueless about what to do next, we are trying to give some insights into the options that are available to expect capital gains. Whether an apartment or an individual space that you may own, the choices for renting the space are many that only needs a little preparation and decision from your side to the step forward.
Let’s list out the possibilities to rent your property.
The main criteria to rent out residential property is the location. Rent charges would differ from location to location and also based on the accessibility of the property. Along with amenities and other infrastructures available in the property, one can compute the rent for the consumer. After deciding on the charge, it is significant to draft a lease which would differ based on the person/people to whom you are going to rent it out. Company lease, individual lease, paying guests (PG), guest houses and service apartments that are the options in which residential leases can be drafted.
If the property that you own is huge and is solely for commercial purpose, there are lot of choices in store. The main two options to rent out are for retailers and office occupiers. Again the location plays a prime role, yielding a high income, without much worries. Another lucrative option is to give for franchisees, wherein a chance of attaining a profit share from them is also possible. However, before letting it out, the terms of agreement need to be sorted out in this case. For the office occupiers, it includes from software companies to financial institutions to telecom companies who would want to stabilize their stand in the city/state. Ample parking space is added bonus in case you rent it out for commercial purposes where the privileges are many.
The main factors involved in renting out your property, after deciding it’s for residential purpose or commercial purpose, are to decide on the rent, advertisements, preparation of the lease agreements and to register the lease properly. In case of a lease agreement it is necessary to pay 5% of the lease period as a stamp duty and in case of a leave and license agreement around Rs.50, 000/- would be the maximum cost to pay as stamp duty. The other points to be noted are
- Profile of the occupierCompetitor clause
- Security DepositRepairs and alterations
- Lease termProperty tax
- Maximizing rentTermination rights
- Escalation of rent at the time of renewalLock-in period
- Maintenance costForce majeure
- ParkingVarious indemnity clauses
- SignageSub lease clause
- Power availability
Owning a property has always been a profitable aspect, especially if it is situated in a prime location. Analyze the boons and banes associated with renting out the property and take a decision that would earn an income for a lifetime.