Rental agents and property management companies are, of course, the go-to experts when investing in property. However, buyers are often confused about the distinction between the two. While they both play a vital role in locating and maximising your investment, there are fundamental differences between them and how they can help you. Let's look at the difference between rental agents and property managers.
To sum it up, a rental agent, also known as a leasing agent and buyer agent, shows prospective renters the space that could become their new home. In contrast, a property manager is concerned with what happens after the lease is signed.
A property manager is concerned with customer service and ensuring that renters are happy and safe. On the contrary, a rental agent's priority is getting a tenant into a property as soon as possible.
A leasing agent wants to make sales, but a property manager wants the tenant to be satisfied and stay on the property for the long term.
If you are someone who wants to earn money from the rental property but are terrified of collecting rent or receiving calls from tenants about burst pipes? A property manager may be well worth the money.
Also, a property manager can serve as a leasing or rental agent. On the other hand, a rental agent is only concerned with placing tenants.
While some property managers excel at leasing, others focus on building rapport with tenants and resolving any issue as soon as possible.
The truth is, property management isn't a charming career. Tenants can be hard to manage, landlord-tenant laws can be complicated, and property maintenance can be stressful. Having someone handle those issues for you provides you with peace of mind.
How much does a property manager charge?
Most property managers or property management companies charge one month's rent to find a tenant and then charge a monthly management fee. That is a percentage of the rent or a flat fee per unit. The charges can vary greatly depending on the state of the housing market. Generally, management fees range from 8% to 12% of the monthly rent. They may, however, offer a discount if a client brings multiple rental units.
Many property managers can also charge a lease renewal fee of up to 50% of one month's rent to cover the paperwork involved in preparing a new lease and other administrative charges.
How to find the best property manager?
To start, you want a property manager who understands your requirements, particularly how involved you want to be.
Some property managers will involve the owner in many decisions, while others will not. You may choose to be a more passive owner or prefer to be involved in decision-making. It all depends on your search criteria.
You should also look for a property manager or property management company having previous experience managing the type of property you own. Renting an apartment is more challenging than renting a house.
One way to find property managers in your area is by searching "property management companies in Bangalore". We recommend you contact a few property management companies before deciding on one.
To find a reputable property manager, research by contacting several of the company's current clients for feedback. Don't simply choose the cheapest option.
What questions should you ask a potential property manager?
Aside from the basics—how much do you charge, what services do you offer—do your homework by asking potential property managers the following questions:
How do you handle a tenant's emergency? Some will hire a third party to manage these issues, while others may deal with them in-house (the latter is better).
How many home visits do you make each year? Many property managers will claim to make home visits regularly, but this may not be the case. However, you can ensure how many homes visits you want the company to perform each year through the contract.
Why choose PropertyAngel as your property management company?
PropertyAngel Management Pvt. Ltd., or simply PropertyAngel, is a leading O2O (online-to-offline) second landlord platform. We are a Bangalore-based company providing professional property management for villas, individual apartments, and houses.
We are open and honest about everything. For instance, our standards and SLAs define when a specific transfer would happen, how much and what the tenant or landlord will pay for, etc.
Besides, we have a customer presence in 95 countries, manage over 1.5 million square feet, and have a 100% on-time rent distribution record since November 2014.
The Bottom Line
Property managers can be helpful to real estate investors who aren't close to their properties or don't have the time to manage them. However, their services are not free and may not be appropriate for all real estate investors.
Consider your financial and personal needs and the needs of your property before deciding whether you would be comfortable giving up some control of the investment to a third party.
Many people find real estate management a difficult task. It has many moving parts, such as maintenance, tenant management, taxes, and security, to name a few. As a result, many people seek the service of agencies and individuals to manage their properties. Non-Resident Indians, for example, account for a sizable proportion of real estate management inquiries. It is because people can't look after their property while travelling abroad. It is one of the primary reasons why most people prefer professional real estate management services.
However, this does not guarantee success. On the contrary, if you don't follow the basic rules of real estate management, the project could end up as a colossal failure. After all, only top-performing agents can maintain long-term success and outperform their closest niche competitors.
Here, we will provide you with a quick guide to real estate management that will help you meet your goals. Let's look at seven key areas of real estate management.
Make sure your property is well polished.
In brief, real estate management, also known as property management, is the routine inspection and management of various properties. The first rule of real estate management is don't sell properties before they are in excellent condition. Your job is to make the most of the property by repairing it and dealing with the most urgent issues.
Decide the price
This part of real estate management can be tricky for many beginner-level real estate managers because they do not know how to evaluate their properties. If you are one of these agents, here are some things to consider:
Market your property
Marketing is undoubtedly one of the most challenging aspects of real estate management because you must identify the best communication channels and promote the property with the relevant information.
We strongly advise creating a visually appealing website with all the properties available to you. Each item demands a thorough explanation, but a video description would be perfect.
At PropertyAngel, we feature all the properties with relevant information required for a tenant to select a property. Our vacancies are all listed on https://propertyangel.rent. You may also connect with us through social networks.
However, keep in mind to limit yourself to only relevant platforms. Aside from that, display advertising through Google AdSense, Facebook Ads, LinkedIn advertising, and so on if your budget permits.
Maintain your property
We believe you've found the tenants with all of your efforts thus far. However, this is not the end of the story because real estate management still needs you to handle many things, such as property maintenance.
First and foremost, you should visit the location regularly to identify potential problems with the property and prevent further damage. Second, regular visits will help you develop a stronger relationship with a tenant. However, try not to push it too hard and communicate with attention and delicacy.
Real estate management is all about collecting payments. But, it can be a painful and awkward experience when dealing with irresponsible tenants. In general, you can collect instalments or rent in two ways:
Traditionalists in real estate still rely on checks received by mail.
Whereas most agencies today use real estate management software. It's a straightforward rent collection tool that automates the process, generates invoices, and even notifies tenants of late payments.
PropertyAngel is a leading O2O second landlord platform. We are a Bangalore-based proptech firm offering professional real estate management for individual apartments, villas, and houses. Our larger mission is to innovate, simplify, and secure real estate investments. Since November 2014, we have managed over 1.5 million square feet, have a customer presence in 95 countries, and have a 100% on-time rent distribution record.
Be cautious of contract violations.
A contract breach is not something you want to happen all the time, but it does happen in every business. Learn everything you can if you wish to properly care for it, including local real estate and lease regulations. You must follow a very defined procedure when the reason for eviction is sufficient:
Take note of the accounting.
The final point of real estate management is vital because you don't want to end up dazed and confused. The best solution is to hire an accountant to manage your finances, but you can also use an accounting platform. In each case, keeping an eye on expenses and turning the property profitable and fully operational will be much easier.
The Bottom Line
We showed you a quick seven-step guide to real estate management.
The global property management market expects to grow from USD 14.47 billion in 2018 to USD 22.04 billion by 2023, according to MarketsandMarkets. With the expansion of infrastructure and increased visibility for all players, you must maintain customer content while looking for ways to improve.
Do you already follow some of these guidelines? Do you have any additional ideas or thoughts to share with our readers? Let us know in the comments – we'd love to hear about your real estate management experiences!
Do you face problems finding NRI Rental Management Services if you own more than one property? No worries. We, at PropertyAngel, bring a solution to solve your problem. With the help of our NRI Rental Management Services, we find the right tenants for you and keep your rental property up to date. We are one of the best NRI Rental Management service providers, handling all formalities before or during the rental agreement between you and your tenant.
PropertyAngel is a leading provider of NRI Rental Management services in India, giving you complete peace of mind. Our services include effective tenant management, home improvement, property inspection, maintenance, and upkeep to ensure the security and protection of your property.
PropertyAngel deals with all property types for NRI Rental Management services, such as apartments, autonomous homes, workplaces, and other commercial spaces and stores. We promise to take care of all your concerns, from leasing it to qualified tenants to the tiniest details in the contract. You may leave the tenancy management worries and concerns to us and enjoy the results!
How do NRI Rental Management services of PropertyAngel help NRI landlords rent out their properties in India?
At PropertyAngel, our NRI Rental Management services include:
How do NRI Rental Management services handle rent deposits and monthly leasing?
Working with an NRI Rental Management company to maximize your investment returns is a big decision if you own a rental property. Working with such a management company provides hassle-free rent collection, resulting in less stress and less dedicated time. Every task performed by their property manager includes promoting the success of your property for progressive income. A Property Manager manages security deposits, rental income, reserve funds, etc., on behalf of the owner.
Here is a checklist of issues to consider and questions to ask when hiring an NRI Rental Management company:
Payment to Owner
Security deposits are vital for any property damage coverage. If it's not effectively managed, it may result in a loss of owner income.
At PropertyAngel, we collect the leasing amount and deposit it into the specified bank account. If your property is commercial, we handle renter contracts yearly. You can also choose to pay the money to an individual you specify (if possible, a family member or close friend) – exactly how you want it.
What Should a Contract for NRI Rental Management Services include?
NRIs may find it difficult to manage rental property in India. Many NRIs own premium real estate in India for investment purposes. NRIs must have Power of Attorney (PoA) for property transactions to go smoothly without tenancy issues. Both the landlord and the tenant should be aware of their liabilities.
A rental agreement is a legal document that a renter fills out, containing details about property number details, area pin code, mobile number, and other things. Aside from tenant and property information, a renter must understand the various clauses referring to overstay, non-refund of security by the tenant, and other issues.
How do NRI Rental Management services protect your property?
NRIs may face issues like tenants who refuse to vacate their premises despite requests. However, hiring an NRI Rental Management company makes the process easier for you. For example, if a tenant refuses to leave the property, a landlord can issue a legal notice of termination. In other words, if the tenant refuses to leave the property, the landlord has the authority to file a case in a local court. Thus, the advocate can file a legal notice to sue the tenant.
At PropertyAngel, we regularly inspect at specified intervals as mentioned in the package. We schedule our visits in advance and are subject to the tenant's availability. Also, we arrange for any interior repairs that are required and charge the fee to the tenant.
What are the additional benefits of hiring NRI Rental Management Services?
Initially, when you decide to rent out your property, you may find tasks like finding a tenant, rent collection, and repairing toilets and kitchen tiles not that difficult. Though a landlord should learn these tools and tricks for performing such tasks, hiring an NRI rental management company is more costly than managing it yourself. However, there are numerous additional benefits of hiring NRI Rental Management services. Some of them are listed below:
Why choose PropertyAngel for NRI Rental Management Services in India?
Even if a landlord lives outside of India, he is responsible for protecting his property. But can a landlord sincerely protect his property if he stays very far? Thus, a landlord can hire an NRI rental management company to inspect, maintain, and repair the property.
At PropertyAngel, we get things done transparently. We believe trust cannot be built overnight or through a massive branding campaign but is only possible through high-quality and dependable service. So, if you're looking for the best NRI Rental Management services, PropertyAngel is the place to go.
Assume you are an NRI who owns or plans to own property in India. Are you concerned about how you'll handle the long-distance relationship with your property? Who will be responsible for your property while you are away on business? All of these are legitimate questions.
Having a property in India while living in another country can be challenging. With many headaches, such as illegal encroachments, keeping the land clean, paying taxes on time, and maintaining the property, it is more challenging than it seems.
The dilemma of deciding how to manage your properties can be confusing. Always, there are issues involved in managing, maintaining, and dealing with properties, especially when no one is designated to oversee the assets at home. The emotional decision not to sell an ancestral property may outweigh the financial benefits. However, the truth is that only an NRI property management company can keep and manage the rented property in every way.
At PropertyAngel, we speak with NRIs and help them develop a long-term strategy for managing their assets in India within their risk tolerance.
Why Hire an NRI Property Management Company?
However, hiring an NRI property management company requires thorough research to ensure the best propcare service to manage your asset. Below are the reasons why you should hire a property management firm:
An NRI property management company is always on its toes to amicably resolve these perils, whether screening the tenant's records, collecting rent, sorting disputes among tenants, or solving problems between tenants and other members of society. They do not hand over or rent their property to anyone. They find a good tenant who will respect your property and aim to keep it in good condition.
Property investments in real estate, like any other investment, are subject to changing market policies and regulations. An NRI property management company has trained professionals who handle things like tenant eviction when the tenant fails to pay the rent on time. They also provide legal and liaison services to owners to protect them from administrative hassles. Tenancy management is challenging, especially for NRIs. It offers more reasons to hire an NRI property management company.
One of the reasons to hire an NRI property management company is to ensure that your real estate asset is well-maintained to attract potential tenants. It helps you earn a high rental income. Their property maintenance service starts from repairing a tiny wall crack to plumbing perils. A property manager will ensure that maintenance checks and inspections are performed on time to keep the property looking appealing to potential tenants. Thus, they take care of your property to get the best returns on your investment.
As an NRI, you will not have the time to attend to any emergencies concerning your property because you live in a different time zone. And you have to deal with your own daily life. Suppose if a pipe breaks at home and the tenant wants to move out unexpectedly, or something serious happens, such as a break-in, these issues need immediate attention.
Because an NRI property management company is in the same time zone and the city, it can establish a rapport with the tenant. Also, they can take necessary actions to solve the tenant's problems in an emergency.
NRI property management companies have a marketing team that develops the best strategy for listing and advertising your property to ensure it gets occupied as soon as possible. They leverage innovative and effective marketing strategies to place the best advertisement for your asset, determine the best rent rate, and supervise decor enhancements to maximize revenues. These firms know the market value, where to list, and the listing requirements.
An untimely vendor in charge of supplying goods and services at the door can turn off tenants with their lateness. A property management firm can effectively handle this task because of good relationships with reputable vendors, merchants, suppliers, etc. An NRI property management company maintains a reliable network of vendors and contractors.
A property management company is always familiar with market trends and conditions. For example, the Covid-19 pandemic required landlords to be more understanding and accommodating of rental pricing. Many had to reduce the rent to help tenants support their families. Local area developments create an impact on real estate prices.
An NRI property management company will always be aware of such trends and ensure your property rental reflects the changing conditions. Also, a property management firm can provide feedback and suggest modification upgrades that may bring high rental value while reducing maintenance and insurance costs.
To encourage tenants to stay for a long time, an NRI property management company maintains a good relationship with them. They make your tenants comfortable reaching out to them anytime if they have any concerns. A property management firm serves as a liaison between a landlord/property owner and a tenant, maintaining a positive rapport so that tenants know they can contact them anytime.
For many owners, real estate investment is a passive source of income. However, as mentioned before, the hassle of property maintenance is challenging. Hiring an NRI property management company to oversee the residential rental and maintenance procedure, on the other hand, can provide a consistent income source without the owners having to take on new tenancy management and legal responsibilities.
PropertyAngel - The Best NRI Property Management Company
Managing all the time-consuming tasks related to your property can be difficult, especially if you own multiple properties. That is why, PropertyAngel, a leading O2O property management company in Bangalore, provides innovative property management services with a customer-centric approach.
With over 1.5 million square feet under management, a customer presence in 95 countries, and a track record of 100% on-time rent distribution, the company aims to simplify & secure real estate affairs.
So, if you want to make sure you get the best ROI on your investment, visit PropertyAngel.in and get in touch with us today.
You immediately face one obvious hurdle when investing in property as an NRI: your property is often very far from your residential area. It makes timely visits difficult and staying updated on local developments and market trends. At this point, an NRI property management company can be of great help.
When you live aboard, you are already trying to keep up with your life and may not have the time to follow up on property issues.
Suppose you rented out your home in India and left it in the care of a close relative, and there is a water leak in the house. The tenant is trying to contact your relative but is unreachable, while you are unavailable due to a time difference. What does your tenant do, and what do you do to get that water leak fixed asap?
These situations seem simple, but they may happen frequently. A broken window, a water leak, policy changes, unexpected requests from tenants, and so on all add up. In trying times, a relative may not have the potential to address all these concerns.
Therefore, you need an NRI property management company to manage your property from top to bottom.
An NRI property management company takes care of these small but necessary problems for you. And if your tenant left unexpectedly, they ensure any damages or maintenance work is complete and lists your property in relevant places.
Here we list the benefits you can reap by getting yourself an NRI property management company.
Analyzes your Property and the Real Estate Market
When buying or selling a property, you need someone who can constantly monitor the changing real estate market and make the right move at the right time. You may end up underselling or overpaying for your real estate investment if you are unaware of the local market trends and property value. Also, if you already own a property and are looking to rent it out, you may not be fully aware of the local rent trends.
Hiring an NRI property management company provides you with a team dedicated to locating the best real estate investment opportunities for you.
Pays Attention to Every Detail
NRI property management company will have a dedicated property manager who will be able to visit your property regularly to ensure its upkeep and maintenance. Whether the property is vacant or occupied, it requires periodic inspections for weather-related damage and, if occupied, any unreported tenant damage.
For instance, if your property has been vacant for a while, a property manager will visit it and decide what renovations and fixtures are required and how to prioritise them. It may include broken windows, water leakages, flaking paint, deep cleaning, etc. The next step is buying, selling, or renting the property after a property manager has checked it out.
At PropertyAngel, our team relies on effective marketing to generate high-quality leads when buying or selling a property; while handling all calls, visits, showings, and negotiations. In the case of renting, we ensure that your tenants are verified and meet the requirements you may have for who you rent out your property.
Inform People About your Property
If you are an NRI, you will most likely not have time to keep up with the numerous listings and inquiries from potential buyers, sellers, or tenants. A hectic schedule may cost you money on your real estate investment. But, an NRI property management company has a team dedicated to creating proper ads and listings to find you the best buyer, seller, or tenant. When they find the right person, they take the necessary steps based on the type of lead and the property's intent.
Looks After Tenant Management
An NRI property management company has a team of experts who work on various aspects of your property, like finding potential tenants and verifying them. After you are satisfied and like the potential tenants, your property manager will assist you in the agreement procedures and cover all legal grounds for you and your property. Once your tenant has moved in, a property manager will come by to check on the property's ongoing maintenance. They are available to the tenant for any urgent or unexpected requests/complaints/concerns.
Manages all the Taxation and Legal Formalities
At PropertyAngel, we take complete responsibility for filing property taxes and managing legalities. Thus, you won't have to worry about all these concerns. We also give you regular updates on any changes if required to avoid any legal penalties for your property due to missed paperwork.
PropertyAngel - NRI Property Management Company in Bangalore
One of the vital issues property owners face is, "How do we know this is happening?" That is why, at PropertyAngel, we keep our processes transparent to all our customers. Besides, we maintain a high quality of service by distributing rents on time. Our dedicated customer support service answers all your queries.
PropertyAngel is a leading O2O second landlord platform. We are a Bangalore-based company offering professional housing asset management for individual apartments, villas, and houses. Our larger mission is to innovate, simplify, and secure real estate affairs. Since our inception in November 2014, we have managed over 1.5 million square feet, have a customer presence in 95 countries, and have a 100% on-time rent distribution record.
Today, significant cities such as Pune, Mumbai, Bangalore, Chennai, and Delhi NCR are thriving rental hubs due to the rapid growth of IT Hubs over the years. Seeing a market opportunity, several NRIs and residents are investing in these properties, which provide high rental income and capital appreciation.
However, being a tenant is difficult, especially if you plan to rent out your home. The task seems never-ending, from maintaining an appealing décor to dealing with troublesome tenants' legalities! Several prominent NRI Property Management Companies in India offer innovative end-to-end property management solutions to ease the landlord's job and reduce the hassle of NRI Property Management.
Renting out your home while living abroad can be a profitable business, especially if you know how to make it work. When we say profitable, we mean that your property isn't sitting empty but is bringing in big bucks for you. Thus, it is one of many reasons why NRI property management is vital for NRIs.
The best approach is to have a rental agreement. Apart from the rented property's terms and conditions, your rental agreement should include details such as the amount of rent and the duration of the lease. Before we start, what are the various factors that an NRI should consider before entering into a rental agreement for a house in India? Let’s take a look.
Is it possible for NRIs to earn rental income?
NRIs can rent out property in India that he owns with the help of an NRI property management company. They can deposit their rent cash flows into an NRE or NRO account. Rent received in these accounts is freely available. If you do not have an NRE or NRO account, you can rebate the proceeds directly abroad, but you will need a certificate from a chartered accountant certifying that you have duly paid all taxes.
Is the rental income taxed in your residential country?
When you are an NRI, you are a tax resident of another country. In most cases, countries tax residents based on their global income. As a result, tax may be deducted at the source of income earned in India, as in the case of rent, under provisions of Indian Income Tax laws. However, that income may be subject to taxation in your country of residence. In such cases, you must refer to Double Taxation Avoidance Agreements signed by India with other countries.
Now that you know the factors keep the following points in mind when settling the House Rent Agreement.
The Provisions of your Rental Agreement
First and foremost, the terms and conditions in the house rental agreement are vital, as it is a legal contract – an outline of your offerings and expectations from the transaction. An NRI property management company can guide you with your decisions.
Present Condition of the House
It is crucial to document the property's present condition in the rental agreement since you will not be able to visit your house regularly. Describing the current state of your residence and a list of items you have rented out, such as a sofa or a kitchen chimney, will make your rent agreement more transparent and help keep a damage check on your rental assets.
Rent Inclusions and Exclusions
Is the maintenance fee included in the rent? What is the security deposit amount? How much of it is refundable? Who will be responsible for any damage? What will the monthly rent payment method be? It is best to address these concerns in the house rental agreement because renting involves more than just receiving a check at the end of every month.
In India, the average annual rent increase is eight to ten percent, but don't rely on assumptions. Make a detailed chart outlining how and when you will raise the rent. It will mentally prepare your tenant to part with more money in the future, saving you from financial loss as a landlord.
Our team at PropertyAngel, an NRI property management company in Bangalore, handles all rental paperwork. You only need to sign all agreements and documents.
Verification of Tenant's Background
Though it may seem like extra work for many of us, proper tenant background verification is necessary before entering into a house rental agreement. You can hire an NRI property management company if it's difficult for you. As a landlord, you must exercise caution when renting your home to someone else, mainly because you may not be able to visit your property frequently if you encounter a problem with your tenant. So, before signing the deal, get a proper police verification and ask for relevant documents.
Only finalize the agreement after you are sure that all necessary documentation and personal investigation are complete. Never rely on early introductions to lease your property.
Registration of the Rental Agreement
It is mandatory to register all house rental agreements lasting eleven months or more. According to Section 49 of the Registration Act, an unregistered rental agreement is not admissible in evidence. A registered agreement is also considered proof of address, which your tenant can use to get a new phone or gas connection. NRIs can now register their rental agreement online in some Indian states. Just fill out the owner, tenant, and property information and request an online registration.
At PropertyAngel, an NRI property management company, we not only help you in drafting professional rent agreements; but also help you in registering them.
Power of Attorney
Though it is preferable to be physically present when signing the lease, this is not always possible for NRIs living abroad. In this case, Power of Attorney is the solution (PoA). Today, many resident Indians, not just NRIs, use power of attorney to complete house rental procedures without getting involved in the hassles. Even if you live outside of India, you can execute a power of attorney (PoA) through the Indian Embassy. Legalization and Apostilization are the two methods for carrying out a PoA from abroad. Hiring an NRI property management company will take the stress away from your property legalities.
It is also not always necessary to give a lawyer power of attorney. You can also give it to a friend or relative who will be in charge while you are away. However, the process of registering a POA can be time-consuming. At PropertyAngel, an NRI property management company in Bangalore, we guide an NRI in this regard.
PropertyAngel is the best option for NRIs like you who want to rent out their property without getting too involved in the details. Our NRI property management company will help you with the services mentioned above. We will be your point of contact and ensure that you receive your rent on time each month. Join us now!
Investing in commercial real estate is sometimes regarded as a strategy to generate passive income. However, this is a little misleading. Managing a commercial asset involves a large amount of effort that must be carried out to keep the property in excellent operating condition. Outsourcing property management tasks to a professional manager who knows commercial real estate management is one of the only methods to earn passive income.
What is commercial real estate?
Commercial real estate is simply a property that has the potential to create profit through capital gain or rental revenue. For example, commercial property can be an office building, a duplex, or a restaurant or warehouse. If you can profit by leasing or keeping it and reselling it, it's business property.
To understand what a property manager performs, first know what they are.
What is a Property Manager?
A professional property manager or property management business is someone responsible for overseeing the day-to-day operations of a real estate property. Depending on the size and kind of property, the commercial real estate management company might be one or two persons or a huge team that works onsite.
A multifamily property, for example, is likely to have an onsite crew since this property type needs more active management involvement. On the other hand, an industrial property may not require any onsite presence.
In short, the commercial real estate management company takes care of the property on behalf of the owner. The presence of a commercial real estate management company enables property owners to continue building and extending their portfolios without dealing with day-to-day property operations.
What Does a Property Manager Do?
For better understanding, a property manager's tasks can be separated into two categories: operations and finance.
Operational responsibilities of a property manager:
In commercial real estate management, the operational tasks of a property manager are all about keeping the property functioning efficiently daily. Depending on the type of property, this might include:
Financial responsibilities of a property manager
As a part of commercial real estate management, managing the property's finances is another key area of responsibility for a property manager. This covers acts such as:
What to Look for In a Property Manager?
A good property manager might be difficult to hire. But on the other hand, making the incorrect decision may be costly financially and in terms of reputation. To avoid this, property owners and investors should seek the following characteristics in a trained and qualified property manager:
An owner must pay taxes to the government while selling their immovable property under Indian income tax (IT) laws, based on the holding period and profit earned (known as capital gains). The same rule applies to non-resident Indian (NRIs) property sales. There is confusion about property tax management for NRI who want to sell their property in India. Thus, this blog will let you know how much tax is payable and how much TDS is deductible when an NRI sells property in India.
However, one must understand the term "Non-Resident Indian." An NRI is a citizen who has spent more than 182 days in the current fiscal year abroad on business, for a job or any other reason.
All NRI property transactions must comply with FEMA rules
Before we go any further, it is worth noting that all property transactions involving an NRI must abide by the guidelines established by the Foreign Exchange Management Act (FEMA), 1999. The Act defines the rules and procedures for all foreign exchange transactions in India. The Enforcement Directorate (ED) is in charge of enforcing the FEMA.
RBI approval is mandatory
As ruled by the Supreme Court of India, the sale or gifting of a property by a foreign national, such as an NRI (non-resident Indian), requires prior approval by India's banking regulator RBI. As a result, it affects the property tax management for NRIs because of the capital gains.
Section 31 of the Foreign Exchange Regulation Act of 1973 requires non-Indian citizens and companies not incorporated in the country to obtain prior permission from the RBI before acquiring, holding, transferring, or disposing of immovable property in the country.
To whom can an NRI sell his property?
While resident Indians have more freedom in this regard, the rules of property tax management for NRI governing the sale of immovable property to non-resident Indians are slightly stricter. For example, an NRI cannot sell his farmhouse, agricultural land, or plantation property to a non-resident or person of Indian origin (PIO). But in the case of residential and commercial properties, an NRI may sell his residential or commercial property to an Indian resident, another NRI, or a PIO.
Implications of Property Taxes
Being a non-resident Indian knowing property tax management for NRI is vital if you plan to invest in real estate in India. Let's take a closer look at them.
The tax depends on income, and income from property can come from two sources:
Capital Gain From Property Sale
NRIs who sell a property in India must pay a charge on the Capital Gain. The tax is payable on the gain as per the rules of Income Tax under property tax management for NRI. It also determines whether it is a long-term or short-term capital gain.
There is a long-term capital gain (LTCG) if you sell a property after two years from the date of its possession. The tax on this income will be at a rate of 20%, plus a surcharge and cess.
If the possession of the property was for two years or less, it is considered a short-term capital gain (STCG). The tax on this income will be according to the NRIs income tax slab.
Rental Income On Property
As far as the property tax management for NRI is concerned, the tax on rental income in India is taxable under the House Property Act. Here, the tax charged for NRIs will be the same as the other Indian nationals.
Taxation benefits for NRIs selling property
While NRI sellers are entitled to exemptions under various sections of the IT law, they can only claim rebates on their LTCG liability as per the property tax management for NRI.
Tax Exemption Under Section 54
If the NRI invests an equal amount in the purchase of another property, he may be able to claim a refund on his LTCG under Section 54 of the Income Tax Act. It is worth noting that you can only invest your profits, not the entire sale proceeds. This investment should be made within a specific time frame to claim the benefit – one year before or two years after the sale of the previous property. If you use the profits to buy a land parcel and plan to build a house, the construction must be completed within three years of the sale to qualify for the rebate.
However, the exemption under this section is limited to the entire LTCG amount. Any extra money you put into your new investment will not result in a rebate under property tax management for NRI.
Terms and Conditions
Tax Exemption under Section 54EC
Under this section, if an NRI sells a long-term asset and invests the capital gains in NHAI and REC bonds within six months of the sale date, they are exempt from the capital gains tax of property tax management for NRIs. It will lock the bonds for three years.
Terms and Conditions
Tax Exemption under Section 54F
If the NRI has long-term gains on assets other than a residential property, they can save taxes by investing in a residential property in India. It could be possible by purchasing one house or property one year before or two years after you generate the profit. In the case of construction, the NRI taxpayer has three years from the date of capital asset transfer to claim the deductions. If you sell the house within three years of its purchase or construction, the property tax management for NRIs will forfeit the rebate.
Terms and Conditions
How PropertyAngel can help you
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Transfer of property, a vital part of property management for NRI, is the responsibility of the state government where the property is situated. As a result, executing an NRI property transfer differs across India because each state has different statutes, regulations, and taxes that govern such transfers. This blog will cover the best ways to transfer properties for NRIs in India.
Who is an NRI?
A Non-Resident Indian is an Indian citizen who has not resided in India's legal territory for more than 182 days in the previous fiscal year.
Technically, any person who has voluntarily left India with the sole intention of immigrating to another country to seek employment or to conduct business or work in that country. An NRI is someone who has been planning to leave India and live in another country for an undetermined period.
Different Methods Used in India for Transferring Property
The Transfer of Property Act, 1882 governs the legal practice of transferring property in India. This act contains several special provisions highlighting the conditions and rules of property transfers, an integral part of the property management for NRI in India. The fundamental concept says that an NRI can transfer their property to any individual, company, or organization/association. And the property can be immovable or movable. However, every property transaction in property management for NRIs, such as buying, selling, carving interest, etc., is governed by state and central governments.
However, the following are a few methods by which an NRI can transfer any property in India:
Transferring property titles/ownership can be achieved in two ways:
When an involuntary transfer of property occurs during property management for NRI, the court typically seizes the individual's property and; transfers it to someone without regard for the former owner's discretion. When this type of transfer occurs, the joint family or ancestral property assets may be affected.
In the case of a voluntary transfer of property or property titles, the property owner would pass on their property to whomever they choose. The owner can transfer such property in the following ways in property management for NRI:
What types of property can NRIs transfer in India?
Property management for NRI is like any other Indian resident or citizen who has the right to transfer any immovable property in India, whether residential or commercial. An NRI may transfer property to family members or relatives. According to the Indian Succession Act of 1925, NRIs may also have the right to request a share of their ancestral properties from their family members or relatives. If an NRI cannot travel, they can appoint a Power of Attorney to act on their behalf in transferring their property.
Various Types of Property Transfers in India
According to the Transfer of Property Act of 1882, property management for NRI includes various types of property transfers in India:
A sale or transfer of property always means that the owner is selling the property title for a reasonable fee, as stated in Section 54 of the Transfer of Property Act, 1882. All property rights will get transferred to the person who pays the demanded or negotiated price.
The following are the fundamental aspects of a sale transfer:
The primary modes of sale transfer to consider are as follows:
As per Section 58 of the Transfer of Property Act of 1882, a mortgage is the transfer of an interest in a specific immovable property to attach monetary payments in loans, future debts, or performance of the engagement. In property management for NRI, a mortgage is a transfer of an interest in an immovable property that can be used as security to pay all your debts. It is necessary to identify the specific immovable property due to various specifications of the Registrations Act, 1908.
According to Section 118 of the Transfer of Property Act of 1882, when two people collaboratively agree to exchange one property for ownership of another thing or property, even if both properties are money. These types of transactions are known as "exchange under the act." Although it appears that one can exchange only immovable properties under this act, movable goods are exchangeable too.
According to Section 122 of the Transfer of Property Act, 1882, when a property owner hands over a title to someone voluntarily without anything in return, such as the price paid or anything at the owner's discretion, it is considered a gift transfer. The donor is the former owner of the property, and the donee is the person who receives the property as a gift.
Property management for NRIs includes certain conditions when transferring property as a gift. For example, a gift becomes void if a donee is offered something and dies before accepting it. If an immovable property is gifted to a minor, the minor's legal guardian is supposed to assume the property title until the same reaches the legal age.
According to Section 105 of the Transfer of Property Act of 1882, a lease is technically an immovable property with transferable rights for a specific period for a paid or promised price. And one can renew it regularly. A lease is a contract that clearly defines the terms under which the involved party agrees to rent out a property that the transferor legally owns for a specified period.
Section 53 of the Indian Easements Act of 1882 states that anyone possessing a license has the right to do or continue to do whatever they want with immovable property. Without it, the activity or usage of that property is illegal. Thus, a license is a crucial part of the property management for NRIs because it allows permission or authorization to remain or use the immovable property without being considered trespassing or illegal.
Ways through which NRIs can transfer property in India
In India, different methods exist in property management for NRI when transferring ownership of immovable real estate property. The six most common ways to transfer property ownership in India are as follows:
Through a legally valid will
Anyone can acquire their desired rightful property through inheritance or a simple legal will. If the person dies without leaving it, the land or property will be transferred to the legit legal heirs as defined by Indian succession laws.
Inherit property through natural succession under Indian Laws
According to Indian inheritance laws, the beneficiaries of inheritance can acquire their desired property only after the death of the person from whom they are inheriting the property, not before. However, the testator can change the details anytime after the will gets registered.
By deed of relinquishment or discharge
In property management for NRI, if there are multiple owners of any property or assets, one co-parent can transfer their share of the property in the name of the other co-parent using the relinquishment or discharge deed. The co-parent can do it with or without thinking about it. The amount of money exchanged is entirely up to the person transferring the property to the other co-parent.
Partition deeds to settle disputes between parties
A partition deed helps property co-parents when a court orders the local revenue authority to intervene if problems arise between the involved parties.
A gift can range from movable property such as cash, check, shares, jewelry, utility goods, etc., to immovable property such as a house, land, building, etc. It will be a capital asset for the person who receives property as a gift.
In India, the most preferred property management for NRI is transferring property in the execution of sale deeds.
Documents Required for NRI Property Transfer in India
In property management for NRI, the documents required for transferring Indian property will vary depending on the method. And as previously stated, these requirements will vary by state. Depending on your circumstances, you may be required to provide the following documents when transferring property in India:
How PropertyAngel can help you
Our experienced team provides professional and expert legal advice on property transfers for NRIs in India. Visit our website to know more about PropertyAngel.