YOU’RE GUIDE DELHI RENTALS playing landlord

Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} It is essential that the rent should cover at least the costof ownership ¬ the interest factor and a part of the principal amount Jai Mavani If you are the owner of a property and you have rented it out to tenants, you will be expected to maintain yourproperty for them. This is because (and you can take this as a rule) a tenantdoes not have the time to maintain the asset himself and always expects theowner to maintain it. If your property has housed tenantsfor a long time and commanded fairly competitive rates, you can expect a bettervaluation. The case would be vastly different for a property that seesshort-term tenants and rates that spike periodically. Always remember to factorin transaction costs such as stamp duty and brokerage. This counts as goodadvice because these costs can be quite high. Apart from speculation, demandand supply determine the price of your property most significantly. Selectingyour tenants while selecting a tenant, you must consider certain attributes.Primarily, you must ascertain that you have the right mix of positive cash flowand security for yourproperty . The badly chosen tenant can steadilybecome a nightmare ¬ which might never end! It is the class of your propertythat eventually attracts the type of tenant. And that's a fact. You may findsome aspirants who offer you a higher rent for your property and some thatdon't quite make it to your expectations in the department. However, don'tblindly go in for the largest bundle of cash offered. Keep in mind the painfulfact that the tenant eviction process in India can be excruciatingly long. Youshould also consider that in India you can't always research the credit historyof a potential tenant. This is mainly due to the fact that individual creditbureaus in India, as compared to foreign countries, are in nascent stages ofdevelopment. Personal references from commonfriends and acquaintances or third-party references are the preferred and mostcommon form of background check. You can ask for such references from yourtenants before closing the leaseagreement . Before you get into an agreementwith the tenant, remember to gain absolute clarity on what s/he intends to dowith the property. This is important since there are situations in which yourproperty might experience a greater degree of use, hence wear and tear, thanothers. For example, if the property will be used as transit accommodation or a guest house ,maintenance cost will rise significantly. If your tenant mentions that histenancy will involve the stay of many children, you can expect a similar risein the level of wear and tear. Try to factor in these highermaintenance costs into your rent expectation. Terms of agreement yourcommercial negotiations should factor in various pricing and financial issues .They should ideally include a comprehensive list of responsibilities of the lesserand the lessee. This is what you need to considerwhile quoting a rent. It is essential that the rent should at least cover thecost of ownership, which means the interest factor of the EMIs if the leasedproperty is leveraged. Additionally, it should also include a part of theprincipal. It should signify a fair return on investment for you. It shouldequate with the market levels, factoring in any escalations due to any specialusage. Include the society maintenance charges into your rent quote. Also calculate the rent with theunderstanding that you would be bearing the electricity and water charges.There should be an extra charge for any additional space provided. Thisincludes parking spaces and such considerations should be declared to thetenant in advance. Make it a point to bill your property maintenance chargesand security charges separately. It might be prudent to draft an exclusiveagreement for these billings with a detailed disclosure of what types ofmaintenance will be covered. The stamp duty and registration cost must be borneby the tenant though it may be noted that in case of a lapse of such payments,the authorities concerned may charge the landlord. If there is an incrementalfee or profit arising from the sub-lease of the property, the landlord isentitled to a share of such monies. There should be provisions for a securitydeposit and terms of repayment of such a deposit. With regards to the propertyusage, you should lay down some terms as to what the tenant can and cannot doon the premises. If any modifications can be made to the fittings, or if anyalterations to the structure (even painting permissions) are allowed, it is thelandlord's responsibility to clarify this in advance to avoid lastermisunderstandings. The timeframe of the lease and the escalation of price onrollover must also be discussed in advance. Include a mid-term exit clause inthe agreement, including provisions notice periods, penalties, etc. From an overall perspective, it isessential for you to have a laundry list of sorts that gives you a clear ideaof what must be focused upon at the agreement drafting stage. Heads ofagreement or a Memorandum of Understanding (MOUs) made with the help of yourlawyer and broker can help in creating your checklist during the negotiationprocess. Your broker can inform you about current market prices and theloopholes you can use in your favour. Make sure your broker is working in your favoreven if his brokerage is slightly higher. With a good broker, your negotiatingposition will be stronger and you can take care of almost any eventuality. Rentcollection this could well be the sweetest part of the deal but if you'recursed with a bad tenant, this could be the biggest torment. You must ensurethat the tenant pays his rent regularly and as per the agreement. You cancollect rent in the following ways: Cheques or pay order payments to be made forspecific dates inter-bank transfers that can be made through direct debits. The author is Executive DirectorKPMG Pvt. Ltd. This article was first published in Knight Frank's guide booktitled Real Investment: A realestate investment guide for India   Courtesy: HT Estates 20th Feb 2010 For more information regardingapartment in gurgaon, bedroom apartments, buy property in india, commercialcomplex in india, commercial real estate, commercial space in gurgaon, dealers,flats for sale, indian real estate investment, investment options in realestate, luxurious flats, malls, office space, office space in gurgaon, onlinereal estate, penthouses gurgaon, plots, property consultants, property ingurgaon, property india, property investment, real estate company, real estatedeveloper, real estate gurgaon, real estate in india, real estate investmentstrategies, real estate market, real estate news, real estate portals,realtors, realty, residence, residential real estate, sell property, shop,villas, Residential Apartment   Visit www.zameen-zaidad.com         www.propertycafeteria.com  

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