Courtesy: TNN
Property is invariably the single-most rewarding investment many people make in their lifetime.
Owning a home has always been the great Indian dream. Today, it is not exceptional to come across professionals across sectors owning more than one home.
It pays to stay invested in the real estate market. Property is an interesting investment commodity, which yields both rental income and capital gains.
It is for this reason that an increasing number of people are investing in more than one property, to create wealth.
The low bank interest rates on home loans have made buying property even more affordable. So, whether you want to diversify your investments, or are looking at a rental income, buying a home is a good proposition.
Over the long-term, purchasing a property and turning it into a rental property, will make the investment even more lucrative. If you get the right tenant, your property investment will ensure regular returns, in addition to the increasing value of the property itself.
You must remember that choosing the right or wrong tenant can make or break your property investment. A bad tenant could not only cost you dearly financially, but also prove extremely timeconsuming and stressful.
Location: It is also necessary to look for property in areas where can get you a good rental income . When buying a home, you should view the real estate asset as an income-generating commodity rather than just a home for yourself. This is where the entire purchase process differs.
Location is a key factor. For a good monthly return, the location should be suitable for the prospective tenants. Locate in areas that are coming under the new expansion plans for the city. For example, the metro rail route and the planned Peripheral Ring Road are upcoming projects, so look for proximity to these when going in for a home as an investment.
After evaluating your creditworthiness, you can approach a bank for your home loan. Give your existing property as security.
EMIs can be calculated after assessing the rental returns you are likely to expect in that area. Let your tenants help pay off your loan.
Choosing a tenant: Advertise far and wide to get your type of tenant, in the rental bracket you are looking for.
Word the ad precisely to make sure you capture the reader's attention. Give details of the size and quality of accommodation, and its location. Use the three best attributes of the property in the first sentence of your ad.
In this stage of the tenant hunt, it is important not to rush. However keen you are to ensure that your property does not remain vacant, do not rush in to close the deal. It is essential to have a clear judgment on what you want from your tenant, your rent expectations, security deposit, and terms and conditions in the lease agreement.
Once you have narrowed down your prospective tenants, show them around the property. This is also the opportunity for you to meet the individual, understand his culture, habits and lifestyle. Since he will be living in your home, you need to assess him to ensure future cleanliness of your property.
The first meeting with your prospective tenant will give you leads that can help you make a decision.
Sometimes, the tenant may need the house immediately. If he is satisfied he will write out a cheque. To deal with such situations, keep a copy of the rent agreement ready so that both the parties can sign.
To know more about your tenant, consider references from previous landlords, banks and employers. Ask the tenant for his company photo ID card to make sure he is still employed there.
Lease agreement: You are almost there. Once you and the tenant have agreed on the rent, a security deposit, and the terms, and have settled the details, put these details into a lease agreement.
This lease agreement should be made on a stamp paper and should encompass all the terms and conditions between you and the tenant.
Periodically evaluate the rent and extend the lease on mutual agreement to avoid complications and legal hassles.
Real estate is a good longterm investment avenue. When you crunch the numbers between initial investment in the form of down payment, EMIs and current market valuation of the home you live in, you will discover that this was the most profitable investment you have made.
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