Being able to earn a second income through rent is one of the many reasons why real estate is considered one of the best investment decisions. There are multiple factors which can prompt you to rent out your property. Some homeowners choose to buy a house as an investment and decide not to move into it immediately. Your work might also require you to shift your place of residence. Whatever your personal reasons for renting out your house might be, there are certain things landlords need to keep in mind when renting out a house for the first time.
Spruce up your home
Before you put your house up for rent, you need to ensure that everything is in proper condition. If required give a new coat of paint to your home, do a thorough evaluation and check if all appliances, power and water outlets are functioning. If your house is completely bare, you might also need to attach basic utilities like cupboards, stove, fans and light fixtures. This will make your home more appealing, helping you find tenants more easily.
Decide on a rent
It can be tempting to set a very high rent for your house, but doing so will only make it harder for you to get a tenant. Your rent should be very competitive, but at the same time, you shouldn’t undervalue your home either. Generally, your house rent should be a maximum of 2.5-3% of the capital value. This value is by no means definite; it also depends upon the location of your home, amenities available and so on. Premium residential complexes from developers like Lancor which have multiple amenities usually attract a higher rent. An easy way to decide on the rent of your home is by looking at the average rent of similar properties in your area. You can consider charging a higher amount if you have premium fittings or furnishings in your home.
List your home for rent
Today with the number of property rental sites available, finding a tenant has become a very quick and easy process. All you need to do is to create a listing on websites like MagicBricks, 99acres, Quikr, and Housing, with details of your property, expected rent, maintenance charges and amenities. You should also consider uploading pictures of the house as this can increase your chances of finding tenants interested in your property. If you don’t have the time to find a tenant yourself, you can contact brokers in your locality to do the work for you. Finding a tenant should be relatively easy if you have a home in the top real estate investment destinations in Chennai.
Identify a trustworthy tenant
Renting out your home generally involves some amount of risk as you are entrusting your home to a stranger. This is especially true for NRI landlords who will be unable to check whether their tenant is maintaining the house well. This is why gaining as much information as you can about a potential tenant is one of the important tips for NRIs investing in Indian real estate.
Lay down a set of rules for the tenant
As the landlord, it’s important that you clearly communicate the rules you want your tenant to follow while living in your home. Many landlords forbid alterations to the house in any way, including painting walls with a different colour, drilling holes in the walls or changing the fittings. Decide on what rules you want to set and specify them in the rental agreement.
Decide on a security deposit amount
The security deposit is collected as soon as the tenant and landlord finalise the decision. This amount acts as insurance in case the tenant decides to move out of the house before the specified lock-in period or causes any damage to the property. You can decide upon the exact amount to charge as the security deposit based on trends in your locality. Generally, if the tenant has completed the lock-in period and wants to move out, the landlord will have to return the deposit in full. You will also need to specify the amount that will be deducted in case of damages.
Preparing the rental agreement
A rental agreement is the most important document when you are renting out your house as it ensures that your interests are protected. The agreement is a legally-binding document that sets down in writing all the agreed-upon terms and conditions. The agreement should be drawn up by a lawyer and must include:
- Monthly rent to be paid
- Security deposit amount
- Additional maintenance charges
- Notice period for vacating the house
The rental agreement documents are one of the most important house rent rules in India. According to Section 17 of the Registration Act, if the lease period exceeds 11 months, then the agreement has to be registered. Stamp duty and registrations fees will need to be paid at the time of registration.
The income you earn through rent can help pay off the EMI on your home loan or be invested wisely. This is why, even if you choose not to live in your new home immediately, your real estate investment can still be very lucrative.