The rental market has shown high potential with a growth pattern of around 20% in Delhi NCR. An increasing number of real estate agents in Tier 1 and Tier II cities that are devoting their time in the residential rental market. Economic times reported that even though Coronavirus has caused demand downslide, residential real estate prices have increased by 9% in 9 cities including Delhi NCR. Even the government has realized the potential in the market. While introducing reforms to boost the economy, Finance Minister Nirmala Sitharaman stated that she will work with various departments to introduce more reforms in the real estate sector.
Residential rental properties provide the necessary cash flow while increasing the value of an investment through appreciation. Homeowners can also avail tax deductions.
In contrast to all these benefits, why do people feel that owning a residential rental property is a headache?
- Timely rental collection is the biggest issue. Once the tenant moves in, brokers and agents do not take any responsibility. Rent collection and dealing with the tenant are ordeals that the landlord has to face.
- It is difficult to gauge the quality of the tenant. In the absence of screening and reference checks, landlords are worried about the paying capacity of the tenant, their living standards and whether they would be able to maintain the condition of the apartment.
- Mostly in an apartment society, neighbors would often complain to the landlord about disruptions caused by the tenants.
- Maintenance and repairs are always on the owner’s head. And some tenants might call at odd hours for minuscule repairs.
All these problems can be easily mitigated through proper rental agreement and a good real estate agent. Experienced in the US real estate market and with a good understanding of the Indian Real estate market and law, Instant Home solves most of these problems. Rental application screening, detailed rental agreement, and property management services help Instant Home provide landlords a higher return on their residential rental investment.
To reap higher returns, investors in the residential rental market should take note of the following points:
- Invest in Affordable Apartments
Even the government has realized the need for affordable housing. Taking a cue, developers are also focusing on affordable housing. With the current ease of investment, it is wiser to invest in affordable housing. Given the current market situation, keeping the prices down would lead to higher returns.
- Think about Co-living
There is an increased demand from millennials for co-living spaces. People in the age group of 18 to 35 years in Tier 1 and Tier 2 cities make up around 30% of the population looking for rental properties. When it comes to the Delhi NCR region, even MagicBricks has reported that there is a higher demand for co-living spaces.
- Employment Opportunities
Invest in apartments that are near growing employment hubs. These regions provide a regular supply of good tenants. Higher income tenants are more likely to leave the property in good condition and are likely to have limited time stay.
- Locality Development
Another factor to consider is locality development. Areas that are developing are a good investment opportunity. There are good chances that the current rates would be lower than the expected rates. Developing areas have high rental demand and once the area is developed provide good appreciation in the overall value.
Usually, investors buy residential rental apartments on a mortgage. Before investing, it is good to understand the average rent in the neighborhood. A wise investment is where the rent can cover the EMIs.
Investing in the real estate market could add stability to the portfolio. The biggest benefit is that they provide the necessary liquidity. Rent often provides a cushion to the income of the homeowner. The real estate sector has always shown an appreciation in the value. This decreases the vulnerability that is often accompanied by any other kind of investment. And if the property is managed well, with a proper rental agreement, then there is no cause for any headache! To make the most out of this opportunity, all a homeowner needs is a good property management company or property consultant.