Overview
If you are an NRI holding any property in India, an obvious hurdle that you would often come through is the purchase and maintenance of the property in a country that is far away from you. Having hardly any time for making visits or time to follow up with the property issues, keeping yourself updated about the developments happening in society and all the changes in the market trends, is where the role of property management comes into the picture. For instance, you invested in any residential property in India and left the property in the care of your close relatives. However, suddenly if you get a call from your tenant that there has been a major water leakage, and your close relative is unreachable and you are unavailable due to a time difference. What would you do? And how can you manage toget that water leak fixed asap? Although these issues might sound simpler, situations may arise more often than anyone would have ever imagined. Broken window panes, water leaks, policy changes, unexpected requests from tenants, etc. Unreachability to your closest relative might increase your worries. Therefore, you need property management services that will help you to manage your property in an efficient manner leaving you free from all woes related to property matters in India.
Yes, you heard it right! There are property specialized agencies who work to assist their clients to not only take care of the property but also use their expertise in helping the clients to earn a general income out of it by putting the residential abode on rent. They provide end–to–end solutions from property evaluation, tenant screening, signing a lease, collecting rental payments, marketing vacant spaces, property inspection, interior designing services, and maintenance as part of their services including an add-on service.
Accordingly, there are several rental property owners (including NRIs) who are availing rental property management services in India to oversee the day-to-day undertaking of the property and deal with the queries of the occupants.
Property Market – Scope of Real Estate Investments in India
Fast fox, an online-to-offline (O2O) property brokerage firm based in Gurugram India has estimated the Indian property rental industry worth $32B at present. Megacities like Pune, Mumbai, Bangalore Chennai, and Delhi NCR, etc. attract mass migration due to educational & employment opportunities. These places are booming hubs of the rental market owing to the fast-paced IT Hubs that have come up over the years and are even more increasing with rental trends such as Co-working spaces & shared living becoming popular among the masses, which are being leveraged by property management companies.
The Real estate industry in India remains an attractive source of investment for property investors, especially Non-Resident Indians (NRIs). Irrespective of where they live, the feeling of purchasing a property in India either for living or any other purpose remains truly remarkable for NRIs.
Under the FEMA (Foreign Exchange Management Act) regulations, NRIs can buy or own immovable property in India while being subject to minimal formalities and are only required to fulfill registration procedures in real estate. Also, they can earn a regular rental income subject to fulfilling tax compliances in India.However, their investment in real estate projects remains exempt from any major legal requirement like any normal citizen in India. They could also easily transfer the immovable property to either any resident or any citizen of India residing outside India or even a person of Indian origin residing outside of India.
Accordingly, NRIs often maintain and support a full-spectrum portfolio across all asset classes i.e. shares, mutual funds, FDs, real estate, and especially the latter one as it is the one which is dynamic and offers higher capital appreciation as high as 8-10 % of the purchase value.
However, a property is not just only a high ticket purchase, as it also needs care and maintenance. But, home buyers are burdened with managing multiple or bulk properties and rely on property management companies for assured timely rents and proper management of the property in their absence. The repair & maintenance aspect of the property is a crucial aspect of the property for property owners as the depreciation value of these properties would determine the return on investment on the purchase of the property. Thus, Property owners including NRIs seek experienced property managers that could help them in the preservation and upholding of the property in safe and habitable conditions for self-occupancy at a later date.
Understanding Property Management
So, what is property management? Property management is the operation, control, maintenance, and oversight of real estate and physical property which could be either residential, commercial, or land real estate by a third-party contractor. There are specialized agencies in India that not only help their clients to take care of the subject property but also offer value-added services such as looking for tenants to generate passive income through rent commonly known as Property Management Companies.
Similarly, these property managers also take responsibility for undertaking responsibilities such as day-to-day repairs and ongoing maintenance, security, and upkeep of properties for the owners of properties who have made investments in any kind of property be it an apartment or condominium complexes, private home communities or shopping centers, or and industrial parks. Therefore, their main duties are limited to the maintenance of the routine tasks delegated to them by the owners and preserving the value of the properties they manage while generating income.
Who needs to avail of Property Management Services?
There are several kinds of property owners who could benefit from the services offered by the manager of the property. While some landlords may have multiple properties to look after or lack time or expertise while others may be too far from the property to make periodical visits to oversee its maintenance. Some owners may only be interested in owning rental properties and earning profits from them. Therefore, all of these people hire professional property managers which could fulfill their expectations from their property investments.
Similarly, there are NRIs who require specific property management managers who will help them regularly to take care of the property with services such as transfer of property, property investigating, assessment of property, and purchasing or offering of property in India.
Who is a Property Manager?
Property Managers may either be an individual or a business entity who are in the business of offering property maintenance and other additional services helping the owner of the property to appreciate the value of the property as well as earn any passive income out of it. There could be various reasons for the property managers to hire a property manager from managing their rental properties to wanting a more professional approach to the property.
In simple words, property managers oversee the maintenance and timely inspections. There are online property management companies that ensure that the property owners can get maximum returns at minimum risks and all these facilities could be accessed through a Service Delivery Platform along with other facilities such as support software, call centers, mobile app, online landlord account, etc.
Based on the services availed by the owners of the property, property managers charge a fixed fee or a certain percentage of the rent generated by a property.
Following are the typical responsibilities afforded by a property manager in India-
- Screening & verifying potential tenants
- Completing legal formalities such as drafting, signing, and renewing leases on behalf of property owners.
- Rent Collection
- Property Maintenance including landscaping
- Making necessary arrangements for necessary repairs
- Setting up & adherence to budgets for property maintenance
- Understanding local landlord-tenant laws and time-to-time updatation
- Marketing properties
- Handling taxes & other statutory requirements
Types of Property Management
As property comes in different types in the property management industry, similarly there is various kind of property managers in India. While some specialized agencies work in providing management for any specific kind of property, some others provide property management services over a range of property types, which undertake a huge range of properties to be managed.
i. Residential Property Management
Residential property managers are individuals or business entities who are typically hired to oversee the maintenance and well-being of rental properties and manage the rental process with tenants. They could be helpful to manage properties such as-
- Single-family homes
- Vacation rentals
- Multi-family homes
- Townhouses
- Condominiums
- Apartments
- Manufactured homes
- REO properties, etc.
ii. Commercial Property Management
Usually, the owners of commercial properties have different requirements as compared to the requirements of residential property owners. Commercial property owners could be helpful for the management of properties like
- Public accommodations like Hotels & Resorts
- Retail properties such as malls/ restaurants, and gas stations
- Office properties like doctor’s offices, clinics, etc.
- Rented Co-working spaces where professionals rent property by the day or the hour;
iii. Industrial Property Management
Industrial properties managers undertake the management of properties such as-
- Heavy manufacturing conveniences such as power plants & mills;
- Light manufacturing factories & spaces
- Warehouses& Distribution facilities
iv. Other Property Management
Despite all the above categories, other types of properties don’t fit into the categories above, but that requires management nonetheless. These include-
- Theatres or Resorts
- Sports arenas
- Senior care facilities
- Schools and universities
- Places of worship
Why should an NRI consider availing of property management services?
Property Management companies are always on their toes to amicably resolve to fulfill their responsibilities undertaken for the concerned property than just overlooking its maintenance. Provided below are some of the benefits of hiring a property management firm-
Regular Check-ups and Maintenance of Property
This is one of the primary reasons for hiring a property management company for NRIs as they ensure that the concerned property is well-maintained to attract potential tenants. Normally, one of the greatest challenges faced by an NRI is his inability to travel frequently to do regular property check-ups and maintenance in India. Hiring a property manager could help NRIs with the well-being of the property check-ups and attract real estate assets to attract potential tenants for high rental income. The property maintenance services cover every nook and corner at each level of the house, from resolving the slightest wall crack to plumbing perils.
Eases the perils of tenancy management
From finding potential tenants for vacant properties at the best prices to screening the tenant’s records, collecting rents on time, sorting disputes, or resolving any problems between tenants and other members of the society, an efficient property manager helps to handle it all to amicably resolve these perils hour of the day.
Provides Legal Services
Legal checks are of paramount importance for any buyer interested to invest in the purchase of the immovable property. But, most of the NRI buyers rely on the lenders such as banks or financial institutions who use third-party legal assistance for title search & verification. However, approval of a loan cannot automatically declare investment risk-free. Therefore, property managers also carry out a detailed legal investigation on the potential of any future risk or dispute for the buyers including NRIs.
The Property Manager is also professionally trained & experienced in legal matters offer full-fledged services to its clients and also safeguards their interests in cases such as handling tenant eviction in the pursuit of non-payment of rents. Similarly, property managers hold expertise in offering legal and liaison services to the owners to safeguard them from administrative hassles.
Tax Related Advisory
Along with other minimal compliances, NRIs are also subject to certain tax payments such as the capital gain tax on the sale of a property, etc. These taxation norms change as per the possession duration of the unit before the sale. Thus, only an experience Realty Advisor can help its clients to fulfill compliance with relevant tax laws.
Furthermore, NRIs may also require assistance with functions such as filing of tax returns, compliance with FATCA (as applicable), book-keeping, audit representations (IRS and Income Tax Department), audit per IFRS standards, and GAAP audit, formulation of contracts, gift planning, etc. all of which could be provided by property management companies as part of their services.
Alleviates the value of the investment
It’s a known fact that the real estate sector is highly dynamic and gives higher returns on investment with increasing value. However, seeking advice from professional property management could offer feedback and suggest modifications that could help to bring higher rental value and impact maintenance costs.
Bridges the Gap between the tenant and landlord
Property managers could be hugely beneficial for NRIs since it is not always possible for them to regularly get in touch with the tenants. Thus, property managers act as a convenient set-up to clarify any property-related issues for the tenants on the behalf of the owner either on phone or by making personal visits.
Enables owners to enjoy life-long passive income
Most property owners including NRIs purchase properties as an investment that could help them generate a passive source of income. However, maintaining the well-being of the property seems cumbersome for many. Thus, hiring a property management company to oversee the residential rental and maintenance procedure could help NRIs to earn a regular income without any hassle of undertaking tenancy management and legal responsibilities.
Greater Flexibility in Services
Any person who has maintained multiple properties in different parts of India may find it tedious to manage all the properties & its maintenance of all of them at the same time. No doubt, the more you have, the more chances of earning a high rental income, but it often comes at the cost of peace of mind. However, property managers have enough expertise and resources to handle multiple properties as part of their daily routine.
Their team of expert team handles each of the client properties and provides timely reports on the same.
Ensures seamless Property Marketing
Apart from regular inspection & maintenance of the property of NRIs in India, they may sometimes also require property marketing services so that they could find a suitable tenant and earn passive income from it. However, property management companies also offer property marketing services and with their innovative and effective marketing strategy, property management companies are leveraged to place the right advertisement for their asset, help negotiate to reach the best rent rate, and even supervise cosmetic enhancements to maximize the revenues.
Handles odd-hour requests on behalf of the owner
Being an NRI it would be impossible for you to entertain untimely or unexpected requests of the tenants living on the property in India. Thus, you would require someone trustworthy to handle tenant requests to any day-to-day smaller problems from circuit breakage to solving water problems, so you could stay relaxed and enjoy a hassle-free life.
Conclusion
Property management is a simple, secure, and effective process that is undertaken by a professional property manager or property management company to provide oversight of real estate by a third party as entrusted by the owner of the property.
Being the owner of the property, especially as an NRI could be a daunting task, with various functions such as maintaining the property to its glory to dealing with troublesome tenants’ legalities, all of which seem impossible in the absence of time or knowledge. Thus, to ease the process, several prominent Property Management Companies in India offer innovative end-to-end property management solutions to NRIs. If you are an NRI looking to make an investment in the real estate industry in India, it is advisable to hire a professional property management company that could offer a regular flow of market information, pertinent advice, and an efficient support system for property management. These services are not much expensive and could even guarantee you a certain piece of mind while sitting far away from India.
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