When it comes to any investment, the general rule is that they perform better when left under the care of professionals. Right? Real estate investments are no different, and that is why hiring the right property management company is so important.
Real estate investments are usually high-value, capital-intensive investments worth lakhs or even crores of rupees. Therefore, it makes perfect sense to be very careful when hiring a team to look after such an asset.
Here’s a quick look at the various points you need to consider before handing over the keys of your property to a management company.
How Do You Know If You Can Trust Your Property Management Company?
Here’s a quick look at some of the factors you need to consider before choosing a company to manage your property
1. Does the company have the right to sublet your property? If a management company’s model is to sublet your property, then they can place tenants without your approval, giving them much more control than what is necessary.
2. How much deposit do they plan on taking from the tenant? A good management company knows that the security deposit should cover damages and rent arrears. This could amount to about six months of rent. If the company takes a deposit worth only 2 or 3 months’ rent, you need to be careful because this amount will not be enough in case the tenant causes damage to your property.
3. Who controls the deposit money? If the property management company wants to keep a significant share of the deposit, then you need to be careful. Make sure that you talk to them and retain a majority share of the deposit, to have more control over proceedings.
4. Does the company allow you to take part in the tenant selection process? If the company refuses to have the tenants approved by you, then that gives you very little control over your property. Make sure that you have enough power to veto tenants that you feel can be tough to handle.
5. Does the company share tenant information with you? Even if you allow the management company to find tenants for you, you need to ensure that you have their contact details. In case things go south with the company, you should still be able to communicate with your tenant, and smooth out any issues they may have.
6. Does the company run all the expenses by you? In case the company spends money on the property without your approval and does not send the records over to you, you need to be wary. A good property management firm will always run the financial records by you and get your approval.
Some companies will promise to get you a guaranteed rent every month. However, it would help if you accounted for the fact that in certain circumstances, that might not be possible. For instance, the COVID-19 has brought out so much uncertainty, the best way to protect yourself is to minimize risk and maximize control over your property.
The purpose of this guideline is to safeguard your interests and help you understand how you can keep your property safe as well. We recommend you go through these guidelines before choosing a property management company and reduce the chances of issues cropping up.
To someone starting in the real estate investment sector, the terms associated with it can sound like jargon. They might seem like an unlikely combination of letters to people not used to such investing terms. Starting out in the real estate sector is extremely intimidating, and it can be even more difficult if you don’t understand the complex-sounding terminology that people throw around. However, do not worry, because terminologies and acronyms are not too complicated, and can be understood with ease. Therefore, to help real-estate beginners and property investors out, here’s a look at some of the top real estate terms and definitions you need to be aware of.
Terms Used in the Decision Process
Terms Used While Negotiating A Deal
Terms Used in the Purchase Process
Other general Real Estate terms we should know
Property or real estate investment might be capital intensive, but when done right, it can do wonders for your financial position. The first step towards making the right investment decisions is to understand the market. Using this guide, you will be able to understand the key metrics and terms related to real estate investing. Being able to navigate the market with confidence, will help you make the right decisions and score big. We at PropertyAngel can help you along the way with any query or doubt that you may have. In case you need any help with anything related to real estate in India, reach out to us at PropertyAngel.
Authored by: Dhivya Naresh
The past few months had seen the rapid and aggressive spread of the novel coronavirus around the world. The global pandemic has forced people into their homes and away from their businesses. More than half the world's population comes under travel bans, curfews, and restrictions. Most companies have had to shut their doors and ask employees to work from home. In the US alone, over 6.6 million people have filed for unemployment within a week. During such times, most companies are trying to cut their costs, and one way to do that is by renegotiating the lease on your company's commercial space. Here's a look at how the current situation has forced people to negotiate the rental contracts for their commercial and retail spaces.
Why Renegotiate Your Lease
The COVID-19 pandemic isn't the only reason you should renegotiate your lease. Knowing how to do so is an essential skill that will benefit you quite a bit. The last few years have witnessed an economic recession of sorts, and several industries have fallen prey to it. During such difficult times, being able to cut your costs is the best way to save your business. Re-evaluating your rental agreement is also required when you renew your lease, if the market undergoes changes or if your business is struggling. One common question that everyone has is, "Why should my landlord let me stay for less money?"
Remember that such difficult times affect everyone. Therefore, it isn't just you, but also your landlord and family too, who are worried as a result of this issue. Therefore, ensuring they have a loyal and good tenant for longer periods is in their best interest. In the end, getting less money for more extended periods at least ensures financial security.
What Renegotiation Options Do You Have?
In case your lease agreement is about to expire, you can try to ask for negotiation for cheaper monthly rent. This is especially true if you know you can get that price somewhere else due to changes in the market. In case you are battling financial struggles, you could also ask for a temporary rent reduction as a means to help you through the crisis.
In case the pandemic or some other reason has hit your business very badly, you could ask for a rent abatement. In this case, you tell your landlords that you will not be paying rent for a specified period. However, after this stretch, you will pay the full amount, and sometimes even a small interest. If you expect your business to pick up soon enough, you could also ask for partial rent abatement, wherein you pay only 50% of the full rent.
Subleasing your commercial space means you open up your building for some other company to set up shop. This is an excellent option if you do not occupy the space for a few months or have some extra space you are not utilizing efficiently. Most landlords are okay with this as long as the new tenants are okay with the terms of the rental agreement.
In some cases, retailers who do not want to pay a very high rent can choose instead to opt for paying a percentage of their revenues as rent. This model is extremely popular in the US, and in Europe, as it helps in easing the pressure on the retailers. It helps in minimizing risk, as there is no flat lease rate or monthly rental payment. In some ways, it makes the developer themselves a retailer as they have a share of the revenue generated by the retailer. Landlords can ask for a percentage of sales, a stake in the company, or a combination of rent and sales as their payment.
Other changes you can request include;
How to Renegotiate a Rental Contract for a Commercial Space
Tips on How to Renegotiate Your Commercial Lease
In a perfect world, everyone would understand someone else's position without having to say anything. However, since that is not the case, we all need to negotiate when hard times befall us. But that isn't always a bad thing as it might prove to be what helps us out the most. At the end of the day, we are all humans. People understand that national and global economic situations change at unprecedented speeds. Everything from economic slowdowns to personal crises can affect a tenants' fortunes. However, you can get out of such tight spots by being smart, doing your research, and renegotiating your lease.
Authored by: Dhivya Naresh
The novel coronavirus wasn’t something that any of us saw coming. However, it has had a profound impact on almost all spheres of our lives. Nearly half the world’s population now has some travel ban and curfew, restricting their movement and activities. This, coupled with unrest around the world, the threat of war and natural disasters is setting the wheels in motion for significant shifts in power. The US is now witnessing a large civil rights movement in the form of #BlackLivesMatter.
Similarly, the Gulf and UAE, Europe as a whole, and Southeast Asian countries are reeling under the global pandemic. All of these are countries favoured by NRIs. However, the recent turn of events has made them rethink where they want to settle down finally. This, along with the falling rupee valuation and better RERA laws, allows NRIs to invest in Indian real estate. So, how will this impact our country, and what does this mean for NRIs? Here’s a look at everything you need to know about the impact of COVID-19 on the Indian real-estate sector.
Rupee Takes A Hit
In recent months, the rupee has been witnessing a fall against the dollar due to various reasons. This has helped non-resident Indians scout for properties in their homeland to settle down, and use as an investment. The past few years had been quite sedentary for the residential real estate market in India. However, all of that will soon change due to NRIs from around the world, considering India as a haven for themselves. Lack of transparency, fear of corruption, and safety issues were holding NRIs back in the past when it came to Indian real-estate. Studies show that those trends are now changing.
RERA Improves Credibility
The enactment and implementation of the RERA have helped the real-estate industry better its reputation. The RERA ushered in a new era of transparency, credibility, assurance, and consolidation. All of these have helped the market look more lucrative to NRIs from around the world. The weakening of the rupee has turned India into a substantial market for overseas real-estate investments. Studies show that over 30 % of NRIs want to invest in properties, and that percentage is increasing year-on-year.
Why NRIs Should Consider Real-Estate as an Investment
The COVID-19 Impact
The COVID-19 has led to the disruption of life in almost every country in the world. It has also led to the rupee falling and the rise in the form of the Indian real estate market. Due to the COVID-19, NRIs are coming into the Indian Real Estate scene due to its emergence as a risk-averse investment option. This global pandemic has renewed interest in residential properties in Bangalore, Hyderabad, Pune, Noida, and Gurugram.
Furthermore, due to the chance for good capital appreciation, NRIs are also buying commercial spaces now. The COVID-19 has also allowed NRIs to negotiate good deals and even land ready-to-move-in propositions. If that wasn’t enough, banks are low handing out home loans for as low as 7.15% interest rates. Real-estate experts also believe that the COVID-inspired lockdown has led to the rise in the popularity of technology-driven home buying in India. Virtual real-estate sites are now successfully doing virtual tours, closing deals, and negotiating terms like never before. This added with the fact that most States are trying to bring in e-registration of property documents will make it possible for NRIs to buy their dream homes at least hassle.
However, while buying homes has become easier than ever before, maintaining them is of the utmost importance. NRIs tend to face difficulty in the maintenance and upkeep of their property, as they live far away. However, the presence and collaboration with good Property Management Companies will change all that. Clients will no longer have to worry about issues like;
People who have large real-estate portfolios find it challenging to manage all those properties when they live so far away. That is where PropertyAngel comes into the picture. These companies leverage their knowledge of the industry and local areas to maintain and manage your property to ensure you get the highest returns. It is difficult to handle all the compliances, paperwork, legal issues, and tenant search when NRIs come home for a month in a year. Therefore, PropertyAngel takes that burden off NRIs by doing it most efficiently and effectively.
These PropertyAngel professionals will take care of the property, resolve tenant issues, and supervise the property. This ensures that your property investment remains secure and generates the required income for you. Constant supervision also eliminates the risk of encroachment and illegal occupancy, both of which are serious threats now. So, join hands with us to bypass the cumbersome task of managing your property and ensure you receive the return on investment you always needed! We simplify the tiresome process of managing your property to focus on the more important things in life.
Authored by: Dhivya Naresh
From the very start, the year 2020 has brought with it one of the most challenging issues the world has faced in recent years. For the past few months, the world has been facing numerous adverse effects of the coronavirus pandemic, which has had a devastating effect on the Indian economy as well. India has been under a nationwide lockdown since March 25th, 2020. Now, as India moves to its fifth stage of the lockdown, the number of people infected by the virus continues to rise at a rate higher than ever before. As of June 4th 2020, there are over 220,000 COVID-19 cases and over 6300 death in India (World O Meters). The regular lives of the majority of Indians have been completely disrupted.
The population demographic of the country that has the most significant influence on these changing trends are the millennials and youngsters. This population includes students and young working professionals. They not only comprise one of the most prominent sections of the population, but they are also the trendsetters of the nation. They influence the way we eat, shop, commute, and live. Most of these people leave their homes and go to cities for their work or education. This trend had given a rise to the “Co-living” industry, which largely comprise of dedicated apartment communities for single professionals, with are fully serviced with housekeeping, social infrastructure and is largely a hospitality solution. However the covid-19 pandemic has created havoc in this space, and many of these communities are now empty.
Here are a few key factors that are contributing to this:
Industry experts believe that once these young professionals start returning to their work cities, they will not return to these PG buildings and co-living communities, and instead will move to more organized apartment complexes, with independent units which they can share with their own friends and family, such as those offered by PropertyAngel, Nestaway and other such property management providers.
In the times of such crisis, flexibility is the key. PropertyAngel offers the perfect solution for people who want to live in clean, safe and well-maintained homes with their friends and colleagues. We believe that post the coronavirus crisis, a new trend will emerge in the real estate market, and we are here to make it easier for you to transition into this trend smoothly.
The impact of the coronavirus (COVID-19) is being felt by numerous businesses around the globe. Business owners are navigating a broad range of pertinent issues such as keeping their employees and customers safe, shoring-up cash and liquidity, reorienting operations, and navigating complicated government support programs.
This disruption in business cycles is bound to influence the demand of commercial as well as residential spaces in India’s real estate market. However, at PropertyAngel, we believe that this ripple in the real estate market can be very beneficial to the rental property market of India. To understand that, let’s first discuss the repercussions of the ongoing circumstances on the real estate market and the major reasons responsible for it.
IMPACT ON THE REAL ESTATE MARKET
The festive season which was expected to see a surge in demand owing to Gudi Padwa and Akshaya which are considered to be auspicious occasions for launching new projects and also buying new properties, was evidently not the same this year. It also clear that the Navratri season and other major festive seasons are not going to be the same. The housing market did notice some positive traction over the past few quarters. However, owing to the global pandemic and other influential factors like the slow economy and immense pressure on liquidity, this trend is slowly but surely about to change.
Many property developers are dubious and are rightfully reserved about the launch of new real estate projects considering the current plight of the nation. Developers would rather focus on the completing and sales of their stalled projects instead. Thus, new project launches are expected to see a fall by a margin of almost 15 to 20 per cent this upcoming festive season. With that said, there are surely a few exceptions. Especially the projects that are already in the soft-launch stages and have already seen a fair amount of expenditure on a marketing campaign.
Most of the homebuyers in India belong to the working class category. The pandemic and the possibility of a recession has left many potential buyers unsure of their jobs. This is bound to negatively affect their property buying decisions. Many may not be able to decide to take the responsibility of an added liability and the burden of EMIs after buying a new property with such high levels of uncertainty around their livelihood.
In the meantime, we can expect to see some spike in developers opting for launches digitally. This will allow customers to book site visits online where they will be able to choose specific time slots to avoid crowding and maintain the necessary social distancing. The government advisory to avoid any kind of social gathering is certainly going to impact the number of site visits and thus overall housing sales as well.
However, there is a silver lining for rental property owners in this entire situation. This is especially true in major metropolitan cities like Bengaluru and Mumbai where PropertyAngel primarily operates.
THE SILVER LINING FOR RENTAL PROPERTY OWNERS
The rental apartment industry is now preparing to deal with tenants who may lose their jobs and may be unable to make the current and coming month’s rent. A large number of tenants have already asked for forbearance in April and May, and more will in June. Landlords will seek to emphasize retention, which will mean giving tenants some leniency in the near term. There will be downward pressure on effective rents in the next few months, and property owners will be asking their lenders for forbearance as well.
Although the rental apartment industry is now dealing with tenants who have lost their jobs and may be unable to make the coming month’s rent, the long-term outlook for rentals is still very bright, however, in light of demographic shifts that are still unfolding. This is especially evident because of the aforementioned points. Given the fact that the potential buyers have no choice postponed their purchasing decisions; rental property owners will not see a decrease in the number of tenants in the foreseeable future. In fact, there is a good chance that rental property owners will see an increase in the number of tenants. One of the main reasons for this is that the people that have bought a property still do not have the possession, and probably will not be receiving it any time soon. One of the major reasons for this is because of the mass relocation of construction labourers in the past two months back to their villages and homes. Project completion has become a problematic endeavour and seems impossible at the moment.
The single-family-built-for-rent business might be a long-term beneficiary as well as we may possibly see a shift toward larger units that better accommodate working from home getting rented by families allowing more space for a home office or office nook. This is especially true for families that have members that work in the IT industry in cities like Bangalore, Mumbai, Pune, etc. List your property at PropertyAngel to help you choose the tenant you want to rent the property to.
With the number of enquiries slowing down, share market being impacted and generally slow economy due to the global pandemic, a massive impact across all the housing segments in the real estate industry is inevitable. The outcome of this pandemic on the real estate industry, while loosely predictable, is still largely very uncertain. While the world is yet to know the outcome of the pandemic and how well the country would emerge from the current situation; taking care of your rental properties with PropertyAngel is never a bad idea. List your property on PropertyAngel to find the most suitable tenant.
Mumbai, similar to Bangalore, has a significant number of NRI investments. These increased drastically as the city expanded. With properties belonging to absentee owners, arose the need for professional property management, and a few players sprung up. Besides PropertyAngel, the others to note who are serving this market are PropertyProctor, Azuro, Simplelease among others.
Here is a lowdown on the way most management companies in the city operate:
Some management companies, like us - PropertyAngel - provide pure management services. We do not do sales or other commission based services. However, several companies in the city provide regular brokerage services alongside. Understanding this difference will help you gauge the level of professionalism in management, as well as focus that you can expect.
Scope of Property Management:
The general scope of property management includes:
Some of the companies provide the entire gamut of services, where as several others provide primarily tenant placement services. It is important to understand what scope of services the company will provide before you shortlist one, and ensure that it matches with your expectations.
Most property management companies charge a management fee which is usually 30 days of rent per year, with the following difference
Responsibility & Ownership:
You should be able to gauge the level of responsibility when understanding the charges. If the company charges primarily for tenant placement, then they act as brokers and the level of professional management you will get will be less compared to a focused provider. However, if the company charges for an ongoing management, and you are looking for more than just a tenant, then this might be your best bet. For example, a good question to ask is who is responsible for collecting rent? If the company collects the rent, then they undertake the additional responsibility of following up with the tenant to ensure payment of the same. However, if they simply collect rent cheques and deposit the same in the owner's account, then who takes responsibility in case of a bounce? These are important questions to ask upfront.
Who is the customer?
You would think and expect that for a property management service, the owner is the primary customer. In this case, a good question to ask is whether the company charges the tenant? If they do, then there is a conflict of interest. You want to work with a company that will protect your interest against all odds.
Property Management is at a nascent stage in India. However, in a short span of time, various business models in this space have spring up, some of them catering to families, and many more catering to bachelors:
While most of the property and tenant management companies provide the same type of service, there can be remarkable difference in the delivery. Here are some guidelines to help you make a choice:
-by Vikram Afzulpurkar
They say that assembly line production really started with Henry Ford’s motor company. So effectively though arguably this pioneer invented the assembly line and suddenly cars, which in the 1890s to 1910 were affordable only by the mega rich, became available cheaply. Can the same happen with pre fabricated houses? There is a strong possibility yes. Pre fab houses are special dwelling types of prefabricated building, which are manufactured offsite.
Here, sections of a house are already made and merely need to be fitted in. It of course is a cliché to say that the product is produced on an assembly line. So, while time is hugely saved, there is no doubt that the convenience for all layers of ‘players’ in “construction” is a lot. Currently, if you as a buyer view this so called “market of convenience” which will emerge soon, the obvious advantages are:
To maintain a low budget, gypsum walls and roofing boards with window cut-outs were bought readymade from Cochin. Concrete filling made inside them ensured the house was burglary proof. Instead of spending about 20 lakhs on a steel and concrete construction, Adiga saved about 35 per cent!
Technology available today can help nullify fungus and make it the material water proof. To give you a sense of firsts, the first pre fab house in India was built in Coimbatore. So it’s a practical solution that someone even in a relatively small town like Coimbatore saw fit and not necessarily an experimental idea of modernist thought from mega cities like Bengaluru, Mumbai, Delhi and Chennai.
Therefore the pre fab home is a larger category of technology to finish a home, which consists of having readymade sections of a house. Progressively from supplying smaller components to larger components, these dwellings can claim to be pre fab:
Soon to come to India? We sure hope so! Get ready to welcome the future. Pre fab may stand for pre ‘fabulous!’
Remember one of the lines in the classic movie and true story ‘Titanic’ where the lead Kate Winslet introduces the runaway Leonard Decaprio to various tycoons in the first class section, “... and Jack, there’s John Jacob Aster, the richest man on the ship.” Well, John Jacob Aster was America’s first millionaire through commercial real estate in Manhattan. Commercial real estate has been a number 1 investment choice from the 1800s and has particular benefits in today’s dynamic marketplace.
However, since 1800 the scope of commercial real estate has changed drastically! Today, in that segment you have not only office spaces, and shops, but also warehouses, malls, hotels and student housing, to name a few.
The reason why commercial spaces are not as popular an investment as residential among retail investors, is that its not so much “in your face”. You don’t hear radio ads about commercial spaces, you don’t really see billboards or even Google ads about them, and you can guess why. The best investments are usually invested in by the world’s top and biggest investors. No one is trying to sell these to smaller investors. It’s an easy sell.
While we all agree that a property has two gains i.e. appreciation and rental yields. Sure, residential property in Asia has higher appreciation but in terms of rental yields, commercial property scores much more at 10% versus the former’s 3%. Office space vacancies in places like Bengaluru are extremely low at 3% whereas rental yields are in the range 9-10%! Coupled with appreciation, this is an excellent buy!
The recent e-commerce boom has resulted in a huge demand for warehouses. Moreover, with industries increasingly moving to an import model from low cost countries where labour is cheaper and more easily available, the demand for industrial warehouses goes up. Currently, the vacancy rate in industrial warehouses is only 4 to 6%, whereas shop buildings is 13%.
The other two segments that are gaining traction are hospitality and student housing . Models like AirBnB and bachelor/student housing across the world, in today’s “sharing” economy, have created a lot of investment opportunities.
So, as an investor, it might be worth your while to look beyond the obvious, and research and pick an investment that will give you the return you actually want. For a more detailed discussion on this, do drop us a line. We always love a friendly chat.
-Vikram Afzulpurkar @ PropertyAngel