For an NRI investor, purchasing property in India is fraught with challenges. Being based overseas and owing to the inability to visit often… distance plays spoilsport with an NRI’s investment plans. Then there’s also the dilemma of whether to keep the property vacant or to let it out to tenants. The dynamics of an owner-tenant relationship are tough to handle especially when the parties involved aren’t even in the same country! Let’s take a summarised look at the problems an NRI investor might face while trying to buy and maintain a property in India.
An NRI Investor’s Property Woes!
When it comes to property in India, an NRI investor typically faces the following challenges:
1. The NRI investor doesn’t know where to invest!
Information is crucial when it comes to investing in real estate and property. An NRI investor may consult someone in the region where he/she intends to purchase property, either over the phone or through emails. He/she could also refer to popular research and news sites to gain some perspective. However, it is difficult for the investor to gain actual data that reflects the ground reality – real estate and property trends are region specific and may be subject to local issues which may not be adequately communicated to the investor.
Another important point to consider is the kind of property an NRI should invest in, and the location which will yield the maximum returns. For example, the profitability of a commercial property may differ from location to location. Also, in the case of residential properties, it is ideal to either invest in multiple small apartments or in one large bungalow. Ultimately, returns depend largely on the market demand and the market’s ability to pay rent.
The lack of a trustworthy government website meant specifically for real estate news and updates makes it difficult for the NRI investor to cross-check the information he/she may be getting from other sources. Additionally, there’s the problem of illegal land grabbing and the lack of clear titles to the property. While the introduction of RERA attempts to address this issue, it’s still difficult for the NRI investor to identify the right property, in terms of price and legality.
2. Following up with builders for properties under construction is a pain point!
The NRI investor finds it taxing to keep track of all the issues/updates regarding an under-construction property – unexpected project delays, fraudulent builders, a mismatch in what was promised and what has been delivered, inappropriate information, etc. He/she may have to visit the property multiple times before the property is handed over by the builder/property developer!*
*RERA (Real Estate (Regulation and Development) Act), 2016 has provisions to safeguard investors against such delays.
3. Maintenance of purchased property:
In case the NRI investor has already purchased a property, maintaining it is a challenge from abroad. As stated earlier, if the NRI investor decides to let out the property, it comes with the whole gamut of finding the right tenants and managing them while ensuring his own interests, as an investor are protected!
These just the broader problems faced by NRI investors. We did a dedicated post explaining in details the various problems faced by an NRI investor while purchasing or maintaining a property in India. You can find it here.
Under normal circumstances, the NRI investor will depend either on friends and family or hire a broker to solve his/her property related woes. However, this seemingly ideal solution has its own drawbacks. Let’s take a look at some of them.
Drawbacks of Depending on Family/Friends/Brokers:
Friends and family may not be able to accurately guide the NRI investor with respect to purchasing the right property, owing to the sheer lack of expertise in the field!
Additionally, there could be other issues like:
- They may not be able to keep a watch on the property on a daily basis.
- Often, a close friend or relative might illegally usurp the property, taking advantage of the investor’s absence!
- An investor may also not want to divulge the details of his/her wealth and the properties he/she has invested in, to relatives and friends.
It’s impossible for the NRI owner to verify the genuineness of the broker without depending on friends and family or some references.
- The broker might be in cahoots with the tenant, allowing for a breach of the tenancy agreement without your knowledge.
- The broker may not necessarily keep track of the changes in the rent control act, and such other laws governing the property in India.
- They are not contractually bound nor have any interest in the property management once the transaction of buy/sell/rent is complete.
What an NRI investor needs is not just someone who can ‘look after’ the property – what he/she needs is someone who can take care of all his/her property related woes right from helping him/her make the decision of buying/selling or renting a property to screening of potential tenants, from enhancing the value of the property by maximising rental payments to ensuring that the property is well-maintained. In other words, an NRI investor needs a real estate portfolio manager!
Homzhub – The Solution To An NRI Investor’s Property Woes!
Homzhub takes care of the daily operations of your real estate investments. It involves handling of all your property-related matters, right from the upkeep of vacant properties, to managing the ones occupied by tenants, from dealing with legal and tax related issues, to the overall maintenance and periodic repairs.
It involves the following responsibilities…
In Regards To Purchasing Property:
Homzhub helps the NRI investor to decide if a particular property needs to be bought or sold, whether there is the scope of appreciation, and if renting it out would be beneficial or not. As the platform grows, Homzhub is planning to use technologies with data science algorithms to provide in-depth property related analytics and market insights, to help investors make informed decisions.
In regards to Tenants:
Homzhub focuses on enhancing the value of the property that has been rented out by maximising the rental payments. In fact, Homzhub takes care of all the following procedures:
- Finding tenants
- Screening the tenants
- Registering the lease and rental agreements
- Handling complaints and emergencies
- Dealing with evictions
- Ensuring smooth move-outs
- Maintaining Records of Tenant History
In regards to the Rent:
- Setting the appropriate rent
- Timely collection of rent
- Imposing late fees and fines
In regards to the Maintenance And Supervision of Property:
Homzhub enhances the value of the property by conducting maintenance, repairs and beautification to ensure that the property is attractive enough to be rented out.
- Maintenance of the property
- Looking after vacant properties
- Furnishing new properties
It is important to note, that nothing is done without the prior permission of the owner.
In regards to Maintaining Records and Paying Taxes:
- Maintaining records
- Filing taxes for the property
- Providing legal help and much more.
Additionally, all the information pertaining to the properties owned by the NRI investors are kept safe with the real estate portfolio manager, subject to strict compliance with data protection policies.
For detailed information on the services covered by a Real Estate Portfolio Management Service like Homzhub, refer to the article here.
For complete real estate portfolio management services, get in touch with Homzhub today!