Protecting property: Before you decide to let

House rented

If these are better, it is wise to stay in that locality and let out the other property. Initially, the yields versus outflows may have a gap, but can eventually be squared as rents would increase with time.

Rent calculation

The rent is usually based on the capital value of the premises. It is usually 2.5-3 per cent of the market value. For example, if a 2 BHK flat of 700 sq ft commands a market valuation of R30,000 per sq ft, then the capital value is about R2.10 crore.

The 3 per cent of this value is R6.3 lakh per annum translating into a monthly rent of R52,500. The flat owner should set a target of R50,000 to R60,000 depending on other value factors.

If a building is in a prime location with good proximity, garden or parking , compound, lift, security etc and the flat is well painted, with decent furniture and fixtures, good ventilation and sanitation etc the same flat may fetch up to R80,000 per month.

The customer is ready to pay more for such flat is because one, he does not have to spend anything on amenities and secondly, he gets better life style by just paying a marginal increase. "Usually people prefer to pay more for the furnished flats instead of raw ones even if they are available at cheaper rents," says Krishna Pande, an Mumbai-based broker who specialises in rental deals.

The Paperwork

The services of local real estate agents are preferable to advertisements in newspapers or websites. The broker gives human face to the deal and acts as a mediator for the entire process. He gets potential customers through his database or broker's network.

The selection is based mainly on location and rent. He will inform you of the prevailing market rates and may correct your asking price if need be. He usually charges one month rent as his brokerage. However, if the same party or licensee continues to extend the stay, the brokerage can be reduced to half of that amount.

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