In order to equip you with the best of real estate information Property for Sale Magazine has invited Mr. Chetan Kapur, Founder and Director of Golden Bricks-Real Estate Services. With mammoth expertise and knowledge he will inform and guide you to make better investment decisions. Golden Bricks is one of the leading real estate consultant based in Gurgaon. With over 20 years of experience it operates in residential, retail and commercial sectors in the Guragon region and represents some of the most prominent projects and developers. The company has successfully handled over 1250 projects and effected possession of more than 450 of them. The company offers services like ‘my Home’, ‘Invest+’, ‘Wealth+’ uniquely designed to cater to the needs of consumers.
Property for Sale Magazine is privileged to have a regular column on different aspects of real estate industry, finance and investment from the desk of Mr. Chetan Kapur. For this issue he sheds light on the complete aspect of Rental Housing.
Indian cities are continuously growing in terms of population and an increasing population has led to more pressure on the housing markets. This population mostly includes migrant workers, students, and single working women among others. It is also a fact that developing cities have always attracted working populations from the surrounding areas. So, the rental property market is the biggest option for this growing population. A healthy rental housing scenario offers less financial strain on the people compared to other options.
This is a trend we see in cities the world over, where the rental market thrives even when end-user housing sales are constrained due to macroeconomic factors.
How rental housing helps in the growth of the economy?
Urban planners have always believed that in the absence of rental housing people would be forced to occupy slum belts and other kind of irregular housing structures which would pose a challenge for the urban development and law and order situation due to increased crime rates. Moreover, a city which is not able to meet up to the requirements of rental housing will never be able to maintain its skilled manpower. Migrating work force will opt for other cities in this case which offer a good stock of rental housing. A good rental housing policy tends to boost the influx of skilled manpower in the city.
Affordable rental housing must always be encouraged in a city which seeks to grow and prosper. A city’s town planning authorities and state governments alike must take heed of the fact that growth in the rental housing sector will push the economy ahead.
Taking a cue from the same in the year 2016, the government announced its National Urban Rental Housing Policy which intends to address the need of homes for people migrating from rural areas to urban areas. The policy will benefit property owners or landlords through fiscal incentives who have so far stayed away from renting out their properties.
If the policy becomes a reality then we will soon witness massive investment in localities which have the potential to provide the rental housing stock. It will give a boost to the construction and ancillary industries as well.
The bright prospect of growth in rental housing can be considered as a worthy investment portfolio. The benefits of owning rental properties are as vast as you desires and long term vision. Real Estate properties are available in different forms which include residential housing, shopping centers, warehouses, office building etc. which can be considered as prospective options to invest.
What are the benefits of owning a rental property for an investor?
Rental property investments are generally capital intensive and dependent on cash-flow. In contrast to the equity markets rental property investments are more stable, hedges against inflation and have tax benefits. Rental property gives investors with the benefit of steady stream of income. The return itself is quite attractive as you have a good chunk of money after a time period. Moreover the property owner also benefits from the capital appreciation of property value.
A rental property offers taxation benefits. You can deduct certain expenses from your income reducing the taxes you owe. Deductions can include interest, property taxes, insurance, utility bills, maintenance/upgrades and property management fees.
There is no denying from the fact that owning multiple rental properties does not hinders your regular job routine and helps you avail the benefits of passive rental income. Rental properties keep your pockets filled even during a time of economic emergency or failure. Finally, during the old age a rental property can give you a good amount of money which comes in the form of capital appreciation, when you sell a rental property.
Mr. Chetan Kapur | Golden Bricks-Real Estate Services
Things you should consider before investing in a rental property.
Yes, though the benefits of investing in rental property are worthwhile but, you must consider some important aspects before buying a property for giving it on rent. Any kind of property must be considered for investing by analyzing the location, investment amount, capital appreciation, resale value etc.
Location is one of the most important aspects to consider while investing. If you are investing in your city then it becomes quite easy for you to keep a check of your properties. On the contrary investing in other cities with high rental rates can give you better returns. The choice should be made according to one’s financial status and life situations. A good location also attracts tenants who pay their rent on time and are also willing to pay a premium for good location.
It has been witnessed that with high influx of global franchises many property owners are letting their properties to brands. These brands range from coffee shops, pizza outlets, etc. If you choose this route, apart from rent you may even ask for a profit share every month. Of course, different brands function differently, depending upon your negotiations with them, you can either decide on the monthly rent or earn by the profit-sharing basis.
One must always be prepared for urgent repairs and maintenances. A budget should be set aside to pay for the same. The reason behind this is that in your troubled times you can utilize this money for your property.
Besides the above mentioned points it must also be clear in your mind to have a proper exit plan. An exit plan helps you to gain maximum benefits out of your property. So what is your plan? Do you want to keep your rental property for another 20 years or are you prepared to sell it in the next appreciation phase. A diligent decision should be made keeping in mind your short term or long term financial goals.