Understand how tenant finding works
It may sound surprising to know that majority of property owners rent their property suboptimally. This is usually due to lack of an understanding or misinformation on tenant types, between net returns and monthly rent, between repairs and maintenance, between market rate and market options, and between brokers and professional tenant finding services. In the next 5 mins, you will know how to optimise and find the best tenants for your rental property in Bangalore.
Factors a tenant considers
Bangalore is the most dynamic city in the World in 2018-2019 FY [credit] with a large floating young population. Tenants who rentout better of homes are on a constant churn because events such as job change, marriage, promotion, problems with current home/ surroundings, and discovering better options. Many of them lack knowledge of the city and stay disconnected. Hence they try to live as close to their offices or childrens’ schools as possible. The following is a list of factors a tenant considers in the order of priority.
- Location – how far from office
- Surroundings and ventilation – personal security, cleanliness, kind of society, light and air ventilation
- Transportation and Traffic situation – Availability of public transport.
- Type of community – gated community apartments first
- Rent and Security Deposit – young tenants prefer lower security deposit over increased rent.
- Condition and age of the property – Property needs to be at least pleasant and livable if not luxurious. Property of strong Branded developers get more preference.
- Availability of quality Lifestyle – Restaurants, Markets, Recreation facilities
- Amenities – basic amenities such as security, maintenance, kids play area, walking track.
- Furnishing. Basic first, then extras such as Water purifier, Pull type cloth hangers, Lighting
So, if you are an owner, who wants to Optimise Longterm Returns, you should consider the following.
Consider these before finalising or rejecting a tenant
- What is the situation in your property surroundings – Are there many options to tenants, how accessible are offices, security in the location, public transport.
- If you can find well placed bachelors who can pay better rents and remain in the property for a long time. Data proves that this tenant type is even better than family with kids interms of rents, up keep and ease of handling.
- If you can smartly invest in non perishable furnishing such as water purifier, lighting, better wardrobes, tv mount with showcase, quality curtains/ window blinds. We have seen better offers with small but important furnishing such as these. Usually you recover the investment in 2/ 2.5 years while service life of these will be about 8-10 years.
- If rents much higher than market rate pushes the tenant to only temporarily occupy but vacate later, keeping the property vacant more often, leading to loss of rent and time you spend handling this. Remember, the most important thing to avoid is to keep the property vacant. Try to save pounds first. Loosing few pennies is okay.
- Is your property basically pleasant to live? If not, it is a good idea to get basic repairs, painting and professional deep cleaning done.
- If a good party (tenants who have good background and willing to comply and sign the rules) can pay better rents at the cost of little lower security deposit
Now, it also helps to know some interesting trends and set your expectations right. Some of these may surprise you. These trends are also reiterated by this TOI article on Bangalore Residential Rental Trends 2018.
2019 Rental Trends in popular locations in Bangalore
Rental Trends in Koramangala:
More or less stagnant in popular gated communities such as Mantri Classic, Prestige St. John’s Woods, Prestige Cosmopolis, Raheja Residency, Floriana Estates, Embassy Tranqil. One major reason is because in the last 3 to 4 years, many new IT parks have comeup in far away places such as Kadubheesanahalli, Mahadevapura, Whitefield EPIP zone leading to a shift in peoples place of choice.
For homes other than gated communities, we frequently saw a slight dip in the rental and substantial dip in security deposits (from 10 months to 5 or 6 months).
Rental Trends in HSR layout:
Rents near 27th main remained stagnant while rents near 5th and 14th mains increased slightly. This can be attributed to spurt of many coworking spaces, restaurants, pubs etc. Also many IT folks seem to show increased interest in Bellandur, Kadubheesanahalli, Yemlur and Harlur road. Also note that there are regular traffic hassles to reach IT parks in Bellandur from HSR layout. However, we do think rentals will go up slightly in 2019 owing to clogged roads in other alternate locations such as kasavanahalli road, Panathur road, Doddakannelli, Sarjapur roads.
Rental Trends in Whitefield:
Rents in Whitefield in areas closer to EPIP, ITPL, Borewell road, ITPL-Kundalahalli main road, Nallurhalli main road, AECS layout have shot up substantially over the last one year. We can attribute much of this to traffic hassles caused due to the on-going metrorail construction from KR Puram to Kadugodi, and newly opened offices in Prestige Shantiniketan, EPIP zone. Also areas such as AECS layout near Brookefield provide quick access to IT parks (Bagmane Techpark) near Mahadevapura. However, we do not think this trend will repeat in 2019, except for a few pockets.
Rental Trends in Kaikondrahalli:
Kaikondrahalli, Kasavanahalli, Carmelram witnessed handsome increases in rental during 2017, 2018. However poor condition of roads, road widening works on Sarjapur road, Doddakannelli seem to fuel a temporary slight dip in demand. However, we expect rents to slightly increase during end of 2019 when roadworks and construction of Wipro Corporate office 2 will complete.
Rental Trends in Mahadevapura:
Perhaps the biggest increase in rent is observed in areas close to Mahadevapura. Gated communities such as NCC Ivory heights, NCC Maple heights, Durga Petals saw a steep increase in rent, 10 pc in some cases. However rents did not increase as steep in non gated communities in adjoining areas. Much of this increase can be attributed to finished flyovers and recently occupied IT parks. However, we do not think this trend will repeat in 2019, except for a few pockets.
Rental Trends in Domlur, Indiranagar:
Rents in Domlur, Koramangala, indiranagar has been stagnant and we expect the same trend continues. Infact, many companies are taking up larger office plates in the new IT parks opening up on the ORR – Bellandur, Kadubheesanahalli Mahadevapura belt. Yemur also witnessesed a healthy increase in Rental and Occupancy levels.
Rental Trends in areas adjoining Manyata Techpark:
While we see a slight increase in gated communities with in 2 kms from Manyata IT park, we witnessed a largely stagnant rents away from it. This is largely due to delivery of serveral large gated communities from popular developers – Sobha, Brigade, Prestige, Nikoo Homes, Salarpuria Sattva. New IT parks are expected to be delivered around 2020 on the Byatarayanapura strech to Bangalore International Airport. One can expect steep increases in rent in 2020.
Takeaway from these trends
The important takeaway from these trends is that there is currently an over supply in locations which came up relatively newly and an under supply in locations very close to established IT parks.
While there may be emergent trends, there are somethings you can still do to Optimally rent your property.
Do these before you rentout your property
Let your property stand out
Properties that standout always beat any trend. Tenants line up to book them fast and offer more rent than other near by properties. Go for professional repair, fresh coat of light and bright paint and a professional deep cleaning. Get taps, basins, shower heads de-scaled. Invest in quality bright lighting. Install subtel curtains or window blinds. Make sure all basic furnishings such as tv cabinet, fans, chimney, modular kitchen, bathroom fittings, mosquito mesh, safety grills (if needed), curtains, geysers are in place.
Lure them to checkout your property
Shoot effective Photos and Video. Great marketing material gets tenants to click your ads, take your property seriously, comedown to checkout, and finalyse. It is not really easy to get tenants take notice of your property when they have tonnes of options on various property portals.
Shout out about your property
Market it extensively in all major portals, facebook groups, broker networks, professional circles etc. The more you reachout to, the more your house gets noticed, the more inspections and better will be the quality of offers. This is the funda.
Strategically Negotiate
This is one thing that you shall never assume you know it perfectly. Even very experienced professionals seem unable to predictably negotiate! If not optimally performed, either you don’t receive best possible rents or loose a good tenant to someother property and have your property vacant for some more un predictable time. Remember that most tenants visit in the weekends and that festivals, rains, road repairs, and other commitments can play spoil sport. Never end up with prolonged vacancy. Infact, many tenants ask since how long has the property been vacant and why had the previous tenant vacated.
Neatly and completely, document everything
How many times have we not gotten in to misunderstanding with tenants just because we or they have not kept things in writing? Document the condition of the property, terms and conditions, notice period, late day to pay rents, seciruty deposit, fixtures, emergency contact, employment details, how many will stay, who pays how much maintenance etc. Also document usage of materials and equipment. Please do not forget to include yearly rent escalation.
Enable an easy and quick Move-in
A good start is half the work done! A tenant who feels better about the property and owner is likely to take care of the property and stay for longer time. Quick move in also amounts to less vacancy and more chances that the tenant will not back-out.
Hire a property manager if you can not do everything yourselves
While renting your property gives returns, it can be time consuming and riddled with hassles. India is a country with high cost of real estate owing to poorly planned infrastructure, and a large population. It is a smart and educated strategy to hire a professional property manager to rent out your property. If you do not know how to choose the right property manager, this article helps -> Guide to select the best property management-company.
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